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Centrum Wealth
Sanghvi Movers (Buy)
CMP: ₹383.60
Target: ₹564
Sanghvi Movers (SML) reported good set of results in Q1. Revenue grew by 90 per cent y-o-y to ₹110 crore, with net profit of ₹21 crore as against a loss of ₹6 crore in Q1FY2015. Margins expanded by 1,566 bps y-o-y to 65.4 per cent.
On segmental basis, during Q1FY2016, the wind mill segment contributed 59 per cent, refinery & gas 16 per cent, power 9 per cent, cement 8 per cent, steel and other industries 4 per cent respectively. Further, the top five clients of the company contribute 60-63 per cent to the revenue. SML has witnessed an improvement in enquiries across its business verticals. Given the revival in the overall capex cycle, especially in the wind energy sector and increasing capital investments by companies we expect a strong demand for SML’s cranes going ahead.
SML has been moving up the value chain and investing in higher tonnage cranes to cater to large scale turnkey projects which have high entry barriers. Risks: 1) Slowdown in the wind energy sector; 2) Delay in execution of orders; 3) Delay in payments from key clients.
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