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SYNOPSIS

We initiated coverage of SANGHVI MOVERS LTD and set a target price of Rs.117.00 for Medium term investment.

SANGVI MOVERS LIMITED is the largest crane services company in India, and ranked 7th largest in the world by cranes International.

During the quarter ended, the Net profit of the company increased to Rs.246.63 millions and registering a growth of 13.53%.

The company has 12 depots across country to ensure timely deployment of cranes and more than 30 operational sites across India.

Sanghvi Movers Ltd has recommended a Final Dividend of Rs. 3 per equity share.

Net Sales and PAT of the company are expected to grow at a CAGR of 16% and 14% over 2011 to 2014E respectively.

Years Net sales (Rs.Mn)

EBITDA (Rs.Mn)

Net Profit (Rs.Mn)

EPS (Rs.) P/E

FY 12 4504.74 3378.19 1017.72 23.51 4.34

FY 13E 5090.36 3793.81 1155.24 26.69 3.83

FY 14E 5650.30 4191.02 1279.00 29.54 3.46

Stock Data:

Sector: Logistics

Face Value Rs. 2.00

52 wk. High/Low (Rs.) 131.30/84.50

Volume (2 wk. Avg.) 2821.00

BSE Code 530073

Market Cap (Rs.In mn) 4419.91

Share Holding Pattern

1 Year Comparative Graph

Sanghvi Movers BSE SENSEX

C.M.P: Rs. 102.10 Target Price: Rs. 117.00 Date: June 19th, 2012 BUY

SANGHVI MOVERS LTD Result Update: Q4 FY 12

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Peer Group Comparison

Name of the company CMP(Rs.) Market Cap. (Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

Sanghvi Movers Ltd 102.10 4419.91 23.51 4.34 0.70 150.00

Container Corporation of India 854.50 111070.30 67.54 12.65 2.23 155.00

TIL LTD. 238.00 2406.30 52.82 4.54 0.90 60.00

Action Construction Equipment Ltd 28.45 2642.60 3.32 8.57 1.13 100.00

Investment Highlights

Q4 FY12 Results Update

SANGHVI MOVERS LTD disclosed a phenomenon rise in standalone net profit

for the quarter ended March 2012. During the quarter, the profit of the company

surged 13.53% to Rs 246.63 million from Rs 217.23 million in the same quarter

previous year. Net sales for the quarter rose 15.59% to Rs 1209.75 million from Rs

1046.56 million, when compared with the prior year period. It reported earnings of

Rs 5.70 a share during the quarter, registering 13.53% increase over previous year

period.

Quarterly Results - standalone (Rs in mn)

As At Mar-12 Mar-11 %change

Net sales 1209.75 1046.56 15.59%

PAT 246.63 217.23 13.53%

Basic EPS 5.70 5.02 13.53%

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Break up of Expenditure

Recommends Final Dividend

Sanghvi Movers Ltd has recommended a Final Dividend of Rs. 3 per equity share.

Company Profile

SANGVI MOVERS LIMITED is the largest crane services company in India, and ranked

7th largest in the world by cranes International. The company is engaged in the

business of providing Hydraulic and Crawler Cranes to various industries in the

infrastructure and core sector areas with a fleet of 400 medium to large size Hydraulic

Truck Mounted Telescopic & Lattice Boom Cranes and Crawler Cranes with lifting

capacity 50 MT to 800 MT. It undertakes implementation of turnkey projects, which

includes providing of well maintained equipments, expert technical services and

skilled manpower.

The company has its presence in crane hiring business over two decades. This is the

India’s largest and Asia’s 3rd largest crane hiring company and ranked 7th largest

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crane owning company globally. The company pioneered in catering to crane

requirements of major industries for infra-structure projects in Power, Steel, Cement,

Metal sectors & Metros and caters its product to 75% of traditional Power Sector’s and

65% of the windmill sector’s crane requirement.

It has 12 depots across country to ensure timely deployment of cranes and more than

30 operational sites across India. The company has newly entered the logistics

industry by 132 hydraulic Axles lines. This is Asia’s 1st company to order 132 Axle

lines in a single order and have imported best technology for Indian market.

Logistics:

The transport division is well equipped for the carrying of over dimensional, heavy and

bulk cargo. With experienced professional and the special team the company can carry

any type of Over Dimensional consignments in difficult terrains and long distances

across India. Company is well equipped with the vehicles such as Volvo, MAN, TATA

and hydraulic axles. Pan-India network and customer centric solutions enable the

company to provide a reliable, safe and cost effective service for transportation needs.

Equipments

• Cranes ( Crawler and Truck Mounted)

• Hydrauli Multi Axle Modular Trailer

Clientele:

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Financials Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY11 FY12 FY13E FY14E

Description 12m 12m 12m 12m

Net Sales 3612.46 4504.74 5090.36 5650.30

Other Income 122.77 209.89 220.38 235.81

Total Income 3735.23 4714.63 5310.74 5886.11

Expenditure -1054.47 -1336.44 -1516.93 -1695.09

Operating Profit 2680.76 3378.19 3793.81 4191.02

Interest -491.96 -770.86 -832.53 -915.78

Gross profit 2188.80 2607.33 2961.29 3275.24

Depreciation -928.85 -1106.03 -1249.81 -1374.80

Profit Before Tax 1259.95 1501.30 1711.47 1900.44

Tax -396.84 -483.58 -556.23 -621.44

Profit After Tax 863.11 1017.72 1155.24 1279.00

Equity capital 86.58 86.58 86.58 86.58

Reserves 5472.79 6188.64 7343.88 8622.88

Face value 2.00 2.00 2.00 2.00

EPS 19.94 23.51 26.69 29.54

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12E

Description 3m 3m 3m 3m

Net sales 1099.09 1141.00 1209.75 1246.04

Other income 20.90 24.50 23.04 27.19

Total Income 1119.99 1165.50 1232.79 1273.23

Expenditure -316.58 -340.00 -395.07 -372.57

Operating profit 803.41 825.50 837.72 900.66

Interest -256.33 -191.40 -174.03 -191.43

Gross profit 547.08 634.10 663.69 709.23

Depreciation -274.00 -269.10 -304.66 -298.57

Profit Before Tax 273.08 365.00 359.03 410.66

Tax -127.97 -119.20 -112.40 -139.63

Profit After Tax 145.11 245.80 246.63 271.04

Equity capital 86.58 86.60 86.58 86.58

Face value 2.00 2.00 2.00 2.00

EPS 3.35 5.68 5.70 6.26

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Key Ratios

Particulars FY11 FY12 FY13E FY14E

No. of Shares(in mn) 43.29 43.29 43.29 43.29

EBITDA Margin (%) 74.21% 74.99% 74.53% 74.17%

PBT Margin (%) 34.88% 33.33% 33.62% 33.63%

PAT Margin (%) 23.89% 22.59% 22.69% 22.64%

P/E Ratio (x) 5.12 4.34 3.83 3.46

ROE (%) 15.53% 16.22% 15.55% 14.69%

ROCE (%) 30.20% 34.53% 34.84% 34.55%

Debt Equity Ratio 1.15 1.07 0.95 0.85

EV/EBITDA (x) 1.65 1.31 1.17 1.05

Book Value (Rs.) 128.42 144.96 171.64 201.19

P/BV 0.80 0.70 0.59 0.51

Charts:

Net Profit & PAT

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P/E Ratio (X)

Debt Equity Ratio

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EV/EBITDA(X)

P/BV Ratio

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Outlook and Conclusion

At the current market price of Rs.102.10, the stock is trading at 3.83 x FY13E

and 3.46 x FY14E respectively.

Earning per share (EPS) of the company for the earnings for FY13E and FY14E

is seen at Rs.26.69 and Rs.29.54respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 16% and

14% over 2011 to 2014E respectively.

On the basis of EV/EBITDA, the stock trades at 1.17 x for FY13E and 1.05 x for

FY14E.

Price to Book Value of the stock is expected to be at 0.59 x and 0.51 x

respectively for FY13E and FY14E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.117.00 for Medium to Long term investment.

Industry Overview

Logistics call for an understanding of the total supply chain, the elements of which

include inventories, packing, forwarding, freight, storage and handling. Logistics is

responsible for all the movement that takes place within the organization whether it

is inbound logistics of incoming, raw materials or movement within the company or

the physical distribution of finished goods, logistics encompasses all of these. Typical

logistics framework mainly consists of Physical Supply, Internal Operations and

Physical Distribution of Goods and Services. To put it more simply, the material

supply logistics starts from the base level of “generation of the demand”, through the

“process of purchase” and “supply of material from the vendor” right through to “final

acceptance” and “payments to the supplier” and “issue to the indenter” and has to be

considered as a “one whole activity” with each stage having an impact on price/cost

of material supply. Logistics is, in itself, a system; it is a network of related activities

with the purpose of managing the orderly flow of material and personnel within the

logistics channel.

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MODES OF TRANSPORTATION IN LOGISTICS

In order to transport material from one place to another Logistics Managers are using

Rail, Road, Air, water & Pipe Line as the modes of Transportation. A logistics expert

need to understand these modes based on priorities, product type. lead time etc. to

decide the appropriate mode of Transportation.

Rail: Used for delivery of a wide range of goods including coal, iron ore, cement, food

grains, fertilizers, steel, petroleum products and other heavy goods.

Road: Used by suppliers to deliver goods in a cost effective manner and best suited

for short distances. Many transport companies have expertise for fast delivery,

packaging etc. for making scheduled delivery.

Air: Used mostly for delivery of high value and tow volume goods from distant

suppliers, usually not connected by any other mode of Transportation. It is also

suitable for emergent item to be imported for some specific requirement.

Water: Used by firms for delivery of goods from distant suppliers, mostly conducted

in containers of varied size. This mode is ideal for transportation of heavy and bulky

goods and suitable for products with long lead times.

Pipe Line: Used by oil sector companies for mass movement of Petroleum products

including gases Due to quite low operating cost it is one of the preferred modes of

transportation

Logistics Industry

The Indian logistics industry accounts for a mere 2% ($100 billion) of the $5000

billion global logistics industry despite having the second largest network of

roads at 3.83 million km, the fourth largest rail network of 63000 km, 128

airports, 12 major ports, 1 trans-shipment port and 187 non major ports.

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Indian Logistics sector grew by 8 to 10 percent annually over the last decade.

Several factors have favorably impacted the growth of the logistics industry, like

the country’s tax regime, growth across major industry segments such as

automobile, pharmaceutical, fast moving consumer goods (FMCG) and the

emergence of organized retail.

Economic survey for 2010-11 reflects that economy is an upswing mode, with a

growth of 8.6% in FY10 and FY11 and is projected to grow at 8.75% - 9.25% in

FY12. Strong economic growth and liberalization have led to considerable

increase in domestic and international trade volumes over the past few years.

Consequently, the requirement for transportation, handling and warehousing is

growing at a robust pace and is driving the demand for integrated logistics

solutions.

Exim trade volume of India is growing consistently from last decade hence India

is set to increase its share in global trade from less than 1% now to about 1.6%

in 2012. India’s level of containerization is less than 25% as against global

average of 60-70%. Average time taken to clear import and export cargo at ports

is about 19 days in India, against 3-4 days in Singapore. The trend towards

containerization picked up in India in the last decade. Container traffic has

seen a 12% CAGR in India from 2.5 million TEU in 2000-01 to 7.5 million TEU

in 2010-11.

The incessant growth in containerized traffic provides significant indication of

increase in multimodal transport as containers are designed for door to door

transportation by different modes.

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________________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

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