Sanghvi Movers (SANMOV)
Price: Rs 640 Target: Rs 837
OUTPERFORMER
Sanghvi Movers, India's largest crane-hiring company, is a proxy on the industrial and infrastructure boom in the country. Its aggressive ramp- up in crane capacity has coincided with a severe shortage of cranes globally, which should lead to robust growth in revenue and profits over the next few years. We initiate coverage on the company with an OUTPERFORMER rating.
Thrust on infrastructure to spur demand for cranes: Cranes are an essential component for infrastructure building. The government has unveiled several initiatives to boost infrastructure and investment amounting to Rs 1,400,000 crore have been planned over FY07-12E. We believe this will create huge demand for cranes and Sanghvi Movers will be a major beneficiary.
Dominant player in the crane-hiring business: Sanghvi enjoys a leadership position in the domestic crane-hiring market with an almost 50% market share. It is India's largest crane operator and among the top 5 largest crane hiring companies in Asia. It is ranked 15th globally by Cranes International, a UK based leading magazine tracking the global crane
providers.
Aggressive ramp up in crane capacity: To capitalise on the rising demand, the company has been adding capacities and ramping-up its fleet size. It has lined up capex of Rs 330 crore for FY07-08E, to further boost its fleet by another 60-65 cranes. Of this it has completed expansion of Rs 180 crore in FY07.
Valuations: At the current price of Rs 640, the stock is trading at a P/E multiple of 12.5x its FY07E EPS of Rs 50.9 and 10.7x its FY08E EPS of Rs 59.7. On an EV/EBIDTA basis, the stock is available at 6.3x FY07E earnings and 5.4x FY08E earnings. Given the company's dominant position in the crane-hiring market and the capex boom in India, we believe that the stock
is undervalued. We rate the stock an OUTPERFORMER with a 12-month price target of Rs 837, at 14x FY08E earnings, an upside potential of 40%.
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Price: Rs 640 Target: Rs 837
OUTPERFORMER
Sanghvi Movers, India's largest crane-hiring company, is a proxy on the industrial and infrastructure boom in the country. Its aggressive ramp- up in crane capacity has coincided with a severe shortage of cranes globally, which should lead to robust growth in revenue and profits over the next few years. We initiate coverage on the company with an OUTPERFORMER rating.
Thrust on infrastructure to spur demand for cranes: Cranes are an essential component for infrastructure building. The government has unveiled several initiatives to boost infrastructure and investment amounting to Rs 1,400,000 crore have been planned over FY07-12E. We believe this will create huge demand for cranes and Sanghvi Movers will be a major beneficiary.
Dominant player in the crane-hiring business: Sanghvi enjoys a leadership position in the domestic crane-hiring market with an almost 50% market share. It is India's largest crane operator and among the top 5 largest crane hiring companies in Asia. It is ranked 15th globally by Cranes International, a UK based leading magazine tracking the global crane
providers.
Aggressive ramp up in crane capacity: To capitalise on the rising demand, the company has been adding capacities and ramping-up its fleet size. It has lined up capex of Rs 330 crore for FY07-08E, to further boost its fleet by another 60-65 cranes. Of this it has completed expansion of Rs 180 crore in FY07.
Valuations: At the current price of Rs 640, the stock is trading at a P/E multiple of 12.5x its FY07E EPS of Rs 50.9 and 10.7x its FY08E EPS of Rs 59.7. On an EV/EBIDTA basis, the stock is available at 6.3x FY07E earnings and 5.4x FY08E earnings. Given the company's dominant position in the crane-hiring market and the capex boom in India, we believe that the stock
is undervalued. We rate the stock an OUTPERFORMER with a 12-month price target of Rs 837, at 14x FY08E earnings, an upside potential of 40%.
Download here