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Sanghvi Movers: Compelling Valuations
Sanghvi Movers: Compelling Valuations
Sanghvi Movers
BUY
INDUSTRY INFRASTRUCTURE Compelling valuations
CMP (as on 10 Feb 2017) Rs 244 Sanghvi Movers’ (SGM) 3QFY17 revenue (Rs 1.3bn, FY19E. Nevertheless, SGM would be able to
+2% YoY) was ~8% below our estimates, as gross generate strong OCFs (~Rs 3.2bn) going ahead.
Target Price Rs 325 block yield declined to ~2.58% (vs. ~2.77% QoQ). We reiterate BUY with a revised TP of Rs 325/sh (12x
Nifty 8,794 Utilisation of cranes improved to ~80% (vs. ~66% Dec-18E EPS).
Sensex 28,334
QoQ). While lower freight charges and employee
costs led to better-than-expected EBTIDA margins Highlights of the quarter
KEY STOCK DATA
(66.9%, +110bps YoY), higher depreciation and taxes
Bloomberg SGM IN led to a 23% miss in our APAT (Rs 234mn, -8% YoY) Update on capex plans: SGM imported five 650 MT
No. of Shares (mn) 43 estimate. cranes, of which three have been capitalised in
MCap (Rs bn) / ($ mn) 11/158
3QFY17. The management plans to incur a net capex of
SGM has already deployed five imported cranes of Rs 3.0bn in FY18E by trading 12 cranes of 400 MT for
6m avg traded value (Rs mn) 33 650 MT each in Dec-16. It has also planned to import seven 650 MT and eighteen 300 MT cranes.
STOCK PERFORMANCE (%) seven cranes of 650 MT each and eighteen of 300 MT
52 Week high / low Rs 317/195 in FY18E. With an increase in the height of wind Update on Debt: SGM plans to borrow Rs 2.9bn for its
turbines from 90 to 120 metres (140 metres going capex for FY18E. Post the pre-payment of its term
3M 6M 12M
ahead), the management believes that the demand loans (Rs 500mn), SGM has an obligation amounting to
Absolute (%) 2.0 (10.2) (18.6)
for 650 MT cranes will improve. With enquiries Rs 1.7bn in FY18E. With the ability to generate
Relative (%) (1.0) (12.2) (37.9) flowing in from the power sector, we believe order operating OCF’s of ~Rs 3.2bn, debt servicing is not a
SHAREHOLDING PATTERN (%) inflows for 300 MT cranes are also likely to improve. major concern for SGM.
Promoters 46.88 However, with the medium-term outlook capped for
DIIs & Local MFs 17.08 the wind sector (~4 GW p.a) and delays in the Near-term outlook: With the outlook on wind capex
finalisation of replacements for power plants, we capped at ~4 GW per annum, we expect yields to
FPIs 3.19
expect tepid revenue growth of ~5.9% over FY16- remain under pressure. Maintain BUY.
Public & Others 32.85
Source : BSE
Financial Summary - Standalone
(Rs mn) 3QFY17 3QFY16 YoY (%) 2QFY17 QoQ (%) FY15 FY16 FY17E FY18E FY19E
Ashutosh Mehta, ACA Net Sales 1,327 1,299 2% 1,095 21% 3,082 5,315 5,436 5,930 6,263
ashutosh.mehta@hdfcsec.com EBITDA 887 854 4% 650 37% 1,785 3,544 3,480 3,839 4,055
+91-22-3078-8241 APAT 234 255 -8% 105 123% 23 1,099 944 1,110 1,195
Diluted EPS (Rs) 5.4 5.9 -8% 2.4 123% 0.54 25.38 21.8 25.7 27.6
P/E (x) 452.7 9.6 11.2 9.5 8.8
Pawan Parakh, CFA EV / EBITDA (x) 7.6 4.7 4.5 4.3 3.6
pawan.parakh@hdfcsec.com RoE (%) 0.4 15.6 12.0 12.7 12.2
+91-22-6171-7314 Source: Company, HDFC sec Inst Research
HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters
SANGHVI MOVERS : RESULTS REVIEW 3QFY17
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SANGHVI MOVERS : RESULTS REVIEW 3QFY17
Revenues, EBITDA And EBITDA Margins (%) Utilisations And Average Yields (%)
Sales EBITDA EBITDA Margin (%) Utilisation Average Yield - RHS
90.0% 3.5%
7,000 Rs mn 90.0%
85.0% 3.3%
6,000 80.0% 3.1%
Expect tepid revenue CAGR 80.0%
70.0% 2.9%
of ~5.6% with ~200bps 5,000
60.0% 75.0% 2.7%
contraction in EBITDA 4,000 50.0% 70.0% 2.5%
margins over FY16-19E 3,000 40.0% 65.0% 2.3%
30.0% 2.1%
2,000 60.0%
20.0% 1.9%
1,000 55.0% 1.7%
10.0%
0 0.0% 50.0% 1.5%
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY19E
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY19E
Source : Company, HDFC sec Inst Research Source : Company, HDFC sec Inst Research
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY19E
Source : Company, HDFC sec Inst Research Source : Company, HDFC sec Inst Research
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SANGHVI MOVERS : RESULTS REVIEW 3QFY17
Change in Estimates
Previous Estimates Revised Estimates Change
Higher depreciation and (Rs mn)
FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
interest costs led to a decline
Revenue 5,428 5,767 6,046 5,436 5,930 6,263 0.1% 2.8% 3.6%
in APAT estimates by
EBITDA 3,501 3,736 3,929 3,480 3,839 4,055 -0.6% 2.8% 3.2%
9.4%/17.2% for FY18E/FY19E
APAT 1,047 1,225 1,443 944 1,110 1,195 -9.8% -9.4% -17.2%
respectively Source: Company, HDFC sec Inst Research
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SANGHVI MOVERS: RESULTS REVIEW 3QFY17
Peer Valuation
MCap CMP TP EPS (Rs/sh) P/E (x) EV/EBITDA (x) ROE (%)
Company Rating
(Rs bn) (Rs) (Rs) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Larsen & Toubro ^ 1,399 1502 BUY 1,625 64.8 69.2 69.8 18.0 16.9 16.7 17.2 15.7 13.9 13.1 12.8 11.9
Cummins India * 247 892 BUY 1,005 27.3 30.6 34.4 32.6 29.2 25.9 29.6 26.1 22.8 22.8 23.3 23.6
Voltas 115 347 BUY 351 12.4 14.5 16.6 27.9 23.9 20.9 20.5 16.8 14.1 16.2 16.8 17.1
Engineers India * 106 157 BUY 178 5.9 6.2 8.0 26.7 25.2 19.6 22.0 19.5 13.7 14.4 14.5 18.0
Thermax 104 873 SELL 770 26.3 27.8 31.8 33.1 31.4 27.4 23.3 20.5 17.3 12.8 12.4 13.0
Suzlon 103 17 BUY 24 0.9 1.2 1.5 19.7 14.4 11.5 9.9 8.9 8.1 NA NA NA
Carborundum
50 264 BUY 340 8.9 11.5 13.6 29.5 22.8 19.4 14.1 12.1 10.5 13.4 15.4 15.9
Universal
Crompton Greaves ^ 45 71 BUY 82 -1.2 1.6 1.6 NA 38.0 36.8 13.4 11.7 10.8 -1.7 2.2 2.3
Kalpataru Power * ^ 44 284 BUY 363 17.2 18.5 21.3 12.7 11.9 10.3 9.1 8.3 7.3 11.1 10.8 11.2
Techno Electric ^ 42 370 BUY 371 15.9 19.3 21.9 20.0 16.5 14.5 14.8 13.0 11.4 17.3 18.6 18.5
KEC International 42 164 BUY 179 10.2 11.1 12.7 16.1 14.8 12.9 8.6 7.9 7.1 16.1 15.2 15.3
Triveni Turbine 41 125 BUY 148 4.0 4.5 5.1 31.5 27.9 24.5 22.3 19.3 16.5 39.0 34.5 31.1
Inox Wind 40 182 BUY 298 21.4 24.9 25.8 8.5 7.3 7.0 5.6 4.7 4.4 22.8 22.0 19.8
Sanghvi Movers * 11 244 BUY 325 21.8 25.7 27.6 11.2 9.5 8.8 4.5 4.3 3.6 12.0 12.7 12.2
*Represent SA numbers ^ P/E adjusted for value of Subs /JV's / non-core businesses
Source: Company, HDFC sec Inst Research
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SANGHVI MOVERS : RESULTS REVIEW 3QFY17
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SANGHVI MOVERS : RESULTS REVIEW 3QFY17
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SANGHVI MOVERS : RESULTS REVIEW 3QFY17
RECOMMENDATION HISTORY
Sanghvi Movers TP Date CMP Reco Target
500 9-Feb-16 327 BUY 444
450 27-May-16 285 BUY 456
400 13-Aug-16 262 BUY 422
350
11-Nov-16 226 BUY 370
300
13-Feb-17 244 BUY 325
250
200 Rating Definitions
150 BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period
Feb-16
Sep-16
Feb-17
Nov-16
Jun-16
May-16
Dec-16
Mar-16
Oct-16
Aug-16
Apr-16
Jan-17
Jul-16
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period
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SANGHVI MOVERS : RESULTS REVIEW 3QFY17
Disclosure:
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Any holding in stock – No
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