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We were joined by Mr. Sham Kajale, Executive Director & CFO, Sanghvi
Movers Ltd (SML) who shared his outlook on the industry and company
Key Highlights
n Management indicated improving demand outlook and business environment in the
windmill, power and refinery sector.
n Higher traction in Suzlon orders and increase in orders from new customers like
Sinovel, Gamesa, Vestas, etc has led to improved outlook on its windmill business.
The management is expecting 35-40% revenue contribution from this segment in
FY12E (FY11 - 28%).
n Delays in investment schedule in the power sector have resulted in a subdued pick
up. However, the management is confident of an improvement in the power investment
cycle, and is thereby expecting its power business to contribute to 25-30% of its revenues
in FY12E (FY11 - 30%).
n SML's refinery and steel businesses are showing signs of recovery and are expected
to contribute 8-10% and 6-8% respectively in FY12E.
n SML has been facing stiff competition from players like ABG Infra, All Cargo Logistics,
Reliance, Sarens, etc. However, its strong market share of 40-42% in the crane hiring
space, well-diversified sector exposure and country-wide presence gives SML the
competitive edge.
n SML expects utilization levels to remain between 82-85% for FY12E.
n SML has guided for a stable yield of 3% in FY12E.
n SML expects to incur a minimum of Rs1.7 bn as capital expenditure for purchase of
new cranes. It will scale it up to Rs2.4 bn, contingent to sustained improvement in
demand outlook
n Debt on the books stand at Rs 6.4bn as on FY11, out of which, the company plans to
repay Rs 1.6bn in FY12E.
n The management has guided for 15-16% topline growth in FY12E and expects to
maintain an EBIDTA margin of 72% (including other income).
n SML would continue to generate free cash flow of about Rs2.0 -2.2 bn in FY12E.
n SML is eyeing diversification to utilize the strong cashflows of its rental business. Only
criteria for new business venture would be asset-heavy business on lines of existing
rental business.
Valuations
SML expects steady operational performance, led by sustainable yields and utilization
levels along with improved demand scenario. SML has guided for revenue growth of 15-
16% in FY12E. SML is trading at attractive valuations of 6X FY11 earnings and 0.9X FY11
book value. We have a positive bias on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We were joined by Mr. Sham Kajale, Executive Director & CFO, Sanghvi
Movers Ltd (SML) who shared his outlook on the industry and company
Key Highlights
n Management indicated improving demand outlook and business environment in the
windmill, power and refinery sector.
n Higher traction in Suzlon orders and increase in orders from new customers like
Sinovel, Gamesa, Vestas, etc has led to improved outlook on its windmill business.
The management is expecting 35-40% revenue contribution from this segment in
FY12E (FY11 - 28%).
n Delays in investment schedule in the power sector have resulted in a subdued pick
up. However, the management is confident of an improvement in the power investment
cycle, and is thereby expecting its power business to contribute to 25-30% of its revenues
in FY12E (FY11 - 30%).
n SML's refinery and steel businesses are showing signs of recovery and are expected
to contribute 8-10% and 6-8% respectively in FY12E.
n SML has been facing stiff competition from players like ABG Infra, All Cargo Logistics,
Reliance, Sarens, etc. However, its strong market share of 40-42% in the crane hiring
space, well-diversified sector exposure and country-wide presence gives SML the
competitive edge.
n SML expects utilization levels to remain between 82-85% for FY12E.
n SML has guided for a stable yield of 3% in FY12E.
n SML expects to incur a minimum of Rs1.7 bn as capital expenditure for purchase of
new cranes. It will scale it up to Rs2.4 bn, contingent to sustained improvement in
demand outlook
n Debt on the books stand at Rs 6.4bn as on FY11, out of which, the company plans to
repay Rs 1.6bn in FY12E.
n The management has guided for 15-16% topline growth in FY12E and expects to
maintain an EBIDTA margin of 72% (including other income).
n SML would continue to generate free cash flow of about Rs2.0 -2.2 bn in FY12E.
n SML is eyeing diversification to utilize the strong cashflows of its rental business. Only
criteria for new business venture would be asset-heavy business on lines of existing
rental business.
Valuations
SML expects steady operational performance, led by sustainable yields and utilization
levels along with improved demand scenario. SML has guided for revenue growth of 15-
16% in FY12E. SML is trading at attractive valuations of 6X FY11 earnings and 0.9X FY11
book value. We have a positive bias on the stock.
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