Buy Sanghvi Movers; target of Rs 153: Sushil Finance

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Buy Sanghvi Movers; target of Rs 153: Sushil Finance

Sushil Finance is bullish on Sanghvi Movers and has recommended buy rating on the stock with a target of Rs 153 in its August 10, 2011 research report.

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Sushil Finance is bullish on Sanghvi Movers and has recommended buy rating on the stock with a target of Rs 153 in its August 10, 2011 research report.

"Sanghvi Movers Ltd, a flagship company of the Sanghvi Group, is engaged in the business of providing hydraulic and crawler cranes to various industries in the infrastructure areas with a fleet of 300 medium-to large-size hydraulic trucks mounted telescopic and lattice boom cranes and crawler cranes with lifting capacity ranging from 20 tons to 800 tons."

"Sanghvi Movers Ltd (SML) has reported topline inline with estimates however profitability was above our estimates. The Net Sales for the quarter ended June 2011 increased 22.5% YoY to Rs 1,044.4 mn from Rs 852.9 mn during June 2010. SML's average capacity utilization during Q1 FY12 stood at 86.0%. SML's Average yield for the quarter stood at 2.88%. SML's major contributors to the topline continue to be Windmill and power sector generating more than 50.0% of topline during Q1 FY12.  Raw Materials consumption as percentage of sales increased to 19.0% as against 16.8% during Q1 FY11.  Its EBITDA margins declined to 72.4% mainly due to higher Operating expenses related to increase in staff cost and increase in other expense. Performance on QoQ basis was significantly better due to sharp decline in freight cost during the period. Net profit during Q1 FY 2012 grew 52.4% YoY to Rs 366.1 mn. Higher EBITDA coupled with higher other income and lower tax provision fueled net profit growth. SML's Debt as on June 30, 2011 stood at approximately Rs 6,570 mn with average cost of Debt at 12.0%."

"During Q1 FY12, SML performed well in terms of topline and bottom line performance. SML expects Windmill and Power sectors to be major growth drivers for the Company. SML is continuously replacing its old cranes with new ones and this is expected to increase the yields going forward. We have maintained our top line and increased our bottom line estimates for FY12 owing to higher other income received during the quarter. We have maintained our top line and bottom line estimates for FY13. We expect its top line to grow by 15.0% and 12.0% y-o-y to Rs 4,131.9 mn & Rs 4,627.7 mn in FY12 & FY13 respectively. We maintain a BUY rating on the stock with a target price of Rs 153 (i.e 6.0x FY13E EPS of Rs 25.5)," says Sushil Finance research report.

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