Sanghvi Movers-Performance in line:: ICICI Sec

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Sanghvi Movers: Performance in line…
Sanghvi Movers (SML) reported its Q2FY11 performance that was in
line with our expectations, primarily on the back of a sharp rise in other
income. SML’s total operating income stood at | 89.70 crore reflecting a
growth of 11.5% YoY and 4.1% QoQ. The EBITDA margin declined 513
bps YoY and 371 bps QoQ to 70.9%. The drop in EBITDA margin was
primarily due to bad debts to the tune of | 4.95 crore during the quarter.
The fall in EBITDA margin was partly compensated by a sharp rise in
other income to | 5.6 crore. The company reported a 14.1% YoY and
2.0% QoQ increase in net profit to | 24.5 crore.


Highlights of the quarter
􀂃 During the quarter under review, SML has signed one of the largest
crawler crane orders with Terex Cranes. The company has ordered
for four 1600 tonne capacity heavy lift crawlers and eight 600 tonne
capacity cranes.
􀂃 Yield during Q2FY11 was 3.07%, while utlisation was 80%.
􀂃 In terms of sector wise break-up of revenues for H1FY11, power
contributed 28%, wind power contributed 24%, cement contributed
17% while refinery and gas contributed 14%.

Valuation
We expect SML to report a steady performance in the next few quarters.
The capacity utilisation is expected to remain firm around current levels
(80% in Q2FY11) on account of a healthy demand scenario from the
power sector. At the current price of | 179, the stock is trading at 7.4x its
FY12E EPS of | 24.2. We recommend an ADD rating on the stock with a
target price of | 193, 8x FY12E EPS.