The stock price of Sanghvi Movers, the largest crane rental company in India, has more than tripled in the past 12 months compared with an over 50 percent rally in the Nifty during the same period.
So far this year, too, Sanghvi Movers has outperformed the benchmark index, advancing about 80 percent compared with an over 12 percent gain in the Nifty and a 37 percent increase in the BSE Smallcap Index.
With a market-capitalisation of about Rs 840 crore, Sanghvi Movers hit a fresh 52-week high of Rs 208.90 on June 15, 2021.
The stock saw a breakout from two years of base formation on the weekly charts, which suggests that the upside momentum is likely to continue and could take it higher towards Rs 230, a gain of about 20% from about Rs 196 on June 24.
Sanghvi Movers is ranked the fifth-largest crane rental company in the world by International Cranes (June 2020). It reported a more than sevenfold year-on-year increase in standalone net profit to Rs 7.8 crore in the quarter ended March 2021.
The infrastructure sector has relatively underperformed the benchmark over the past couple of years and within this space, Sanghvi Movers has witnessed a structural turnaround.
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“Sanghvi Movers on the charts logged a resolute breakout from five years’ downward sloping trendline backed by robust volumes, indicating the conclusion of five years’ corrective phase, auguring well for the acceleration of upward momentum,” said Dharmesh Shah, head – technical, ICICI Direct.
“Breakout from past two years’ base formation (142-43) indicates resumption of the primary uptrend that makes us believe the stock would resolve higher and gradually head towards our earmarked target of Rs 230 as it is 80 percent retracement of 2017-20 decline (274-43),” he said.
Shah added that a key point is that since June 2021, the 50-day EMA (exponential moving average) has acted as a strong support on multiple occasions and subsequently, buying demand emerged, highlighting inherent strength.
Most traders consider the EMA more reliable than the simple moving average. The EMA is a weighted moving average, which gives more weight to recent price data.
Shah said that on the oscillator front, the weekly MACD (moving average convergence/divergence) is marching upward while sustaining above the zero line, indicating acceleration of an upward momentum in the stock price.
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