Sanghvi Movers Ltd - Portfolio Track Stock Review - June 11

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SanghviMoversLtd.

COMPANY PROFILE

Sanghvi Movers Ltd, a flagship company of the Sanghvi Group, is one of the largest cranes hiring company in India, third largest in

Asia and ranked tenth largest in the world. The company's main business is operation of cranes. They are engaged in the business of

hydraulic trucks mounted telescopic and lattice boom cranes and crawler cranes with lifting capacity ranging from 20 tons to 800 tons.

The sectors serviced by the company include wind power, steel, power, refinery, cement, metals, construction and paper. The

company also has operations in power generation wind mills of 5.05 megawatts installed in states of Rajasthan and Karnataka.

SMLs service network includes various depots located at Pune, Vadgaon, Chakan, Nagpur, Jamnagar, Bharuch , Delhi, Cuttach

Chennai and others. The company's main business is operation of Cranes, which accounts for 95.9% of the revenues. The company's

extensive network all over India through various depots enables its customers to avail its services efficiently. In a process to increasethe geographical presence of Cranes, the Company proposes to open depot in Jamshedpur. In the next 2 3 years, the Company will

focus more on giving cranes to Power, Steel, Cement and Aluminium Plants, Refinery, Metro and Hydro Power.

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SanghviMoversLtd.

PRODUCTS

DemagCC

2400 Demag

HC

340 Demag

TC

2400

Gottwald Amk 500 KruppGMT350

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Sales MixDuring the last year, SML has been able to increase its share from the Power sector from 28% in FY 2010 to 38% in FY 2011. Almost 60.0%of the Revenues are now being generated from the Power and Windmill space together. With huge growth expected from these two

sectors, the future for SML seems promising.

28%16%

12%

1%1%

egmen w se evenue rea up

2011

Power

38%10%

8%

2% 2%

egmen w se evenue rea up

2010

Power

30%12%

WindMill

Cement

Refinery&Gas

Steel&Metals

22%

18%WindMill

Cement

Refinery&Gas

Steel&Metals

Metros,Roads&Bridges

er n us r es

Metros,Roads&Bridges

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INDUSTRYThe demand for cranes is derived from the infrastructure activity in the country. The Government continues to give priority to

infrastructure, road construction, housing, power and ports. The effect of such investments is noticeable in the economy. Demand for

Heavy Lift Cranes will continue to remain in demand due to investment in Ultra Mega Power Projects to add capacity of 80,000 MW

over the next 5 years, continuation of growth in Infrastructure including large scale investment in Oil & Gas refineries, road

construction, ports and nuclear treaty entered with U.S.A.

OPPORTUNITIES

The Company has been providing Heavy Lift, Plant Erection and Maintenance Services to various large scale projects. It has maintained

a good track record in terms of effective deployment of Cranes at competitive rates with due regard to time schedule as well as safety

and efficiency in operations. Huge opportunity lies in projects announced by Power Sector players under Eleventh Five Year Plan. It has

geared up to play major role in implementation of these power plants. The Company has versatile fleet of Cranes which meets all

requirements for construction of power plants.

THREATS

1. The Company's operations may get affected on account of increase in competition in Crane Hiring Business.

2. Delay in receivables could increase the working capital cycle for the Company.

3. Delay in the project execution due to economic slowdown.

RISKS AND CONCERNS

1. Challenges involved in maintaining optimal utilization and yield of fleet all times and ensuring minimal idle time between contracts.

2. Delay in infrastructure and core projects spending could result in downturn in revenues.

3. Overall slowdown in the economic activities within the country.

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FINANCIAL PERFORMANCESML is expected to grow at CAGR of 13.5% during the next two years based on demand expected particularly from the Power and Windmill

space. SMLs APAT is expected to grow at 13.2% CAGR during the next two years assuming the base case scenario. We expect SML to maintain its

EBITDA margin levels at slightly above 70.0% levels.

800

1,0001,200

n)

APAT

3,000

4,0005,000

mn)

Sales

2009 2010 2011 2012E 2013E0

200

400

600

`(In

2009 2010 2011 2012E 2013E

TotalSales 3,547 3,288 3,593 4,132 4,628

0

1,000

2,000`

(In

76

78

3,000

3,500

EBITDA&EBITDAMargin

APAT 1,011 904 863 928 1,106

66

68

70

72

74

0

500

1,000

1,500

2,000

2,500

%ofSales

`(Inmn)

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2009 2010 2011 2012E 2013E

EBITDA 2,740 2,527 2,558 2,932 3,275

EBITDAMargin 77 76 71 71 70


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SanghviMoversLtd.

QUARTERLYPERFORMANCE

(Rs.mn) PROFIT

&

LOSS

(Rs.mn)

Y/EMar. Q4FY10 Q3FY11 Q4FY11

NetSales 853.6 805.3 1,043.7

Y/EMar. FY10 FY11 FY12E FY13E

NetSales 3,287.6 3,592.9 4,131.9 4,627.7

RMcost 108.0 146.7 244.0

Staffcosts 34.4 32.4 40.4

OtherExpenditure 53.2 46.6 64.4

TotalExpenditure 195.5 225.8 348.9

OtherOp Income 27.7 19.5 20.7 23.1

OpExp 509.6 678.8 789.0 893.0

EmployeeExp 122.4 140.2 161.3 180.6

AdminExp 156.8 235.4 269.9 302.3

EBITDA 661.9 582.2 697.7

Depreciation 215.1 235.7 252.7

EBIT 508.7

360.3

459.4

Total Expenditure 788.7 1,054.5 1,220.2 1,375.9

EBITDA 2,526.6 2,558.0 2,932.3 3,274.9

Depreciation 787.3 928.8 1,100.3 1,165.3

. . .

Interest 113.8 122.8 130.3

PBTinclOI 394.9 237.5 329.1

Tax 145.6 77.0 111.9

, . , . , . , .

Interest 474.7 492.0 647.4 687.9

PBTExcl.OtherIncome 1,264.5 1,137.2 1,184.6 1,421.7

OtherIncome 112.0 122.8 141.2 158.1

APAT 249.2 160.5 217.2

AEPS 5.8 3.7 5.0

EBIDTA% 77.5 72.3 66.9

NPM% 29.2 19.9 20.8

PBTIncl.OtherIncome 1,376.6 1,259.9 1,325.8 1,579.8

Tax 472.3 396.8 397.7 474.0

NetProfit 904.2 863.1 928.1 1,105.9

ExtraordinaryExp./(Income) 0.0 0.0 0.0 0.0

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Source:Company,

Sushil

Finance

Research

Estimates APAT 904.2 863.1 928.1 1,105.9


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BALANCESHEET

(Rs.mn)

Ason31st Mar. FY10 FY11 FY12E FY13E

ShareCapital 86.6 86.6 86.6 86.6

Y/EMar. FY10 FY11 FY12E FY13E

Growth(%)

FINANCIALRATIOS

eserves , . , . , . , .

ShareholdersFunds 4,696.3 5,408.4 6,234.4 7,218.6

SecuredLoans 4,744.7 6,392.5 8,092.5 8,092.5

Unsecured Loans

. . . .

APAT (10.5) (4.5) 7.5 19.2

EBITDA (7.8) 1.2 14.6 11.7

Profitability(%)

EBITDAMargin 76.2 70.8 70.6 70.4

. . . .

CapitalEmployed 10,098.1 12,580.2 15,106.1 16,090.4

FixedAssets 8,812.9 10,789.4 12,089.1 11,923.7

Investments

0.0 0.0 0.0 0.0

Sundr Debtors 1,307.2 1,348.7 1,528.2 1,711.6

. . . . .

ROCE 18.4 13.8 12.8 14.2

ROE 19.3 16.0 14.9 16.4

PerShareData(Rs.)

Adj.EPS 20.9 19.9 21.4 25.5

Ad . CEPS 42.0 44.2 46.9 52.5

CashandBank 58.7 187.1 1,274.2 2,276.0

LoansandAdvances 328.0 635.8 635.8 635.8

Inventories 28.9 63.5 54.0 61.2

CurrentAssets

1,722.8 2,235.1 3,492.2 4,684.5

BVPS 108.5 124.9 144.2 169.8

Valuations(X)

PER 5.5 5.8 5.4 4.5

Price/Sales 1.5 1.4 1.2 1.1

P/BV 1.1 0.9 0.8 0.7

CurrentLiabilities 261.5 293.5 324.2 367.0

Provisions 176.1 150.9 150.9 150.9

NetCurrentAssets 1,285.2 1,790.7 3,026.3 4,297.6

MiscellaneousExp 0.0 0.0 0 0

EV/EBITDA 3.8 4.4 4.5 4.0

EV/Netsales 3.0 3.2 3.2 2.8

DividendYield(%) 1.7 2.6 2.1 2.4

TurnoverDays

Debtorsdays 140 135 135 135

8

Source:Company,SushilFinanceResearchEstimates

Total

Assets

10,098.1 12,580.2 15,106.1 16,090.4

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Creditorsdays 201 149 150 150


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SanghviMoversLtd.

Please Note:

The objective of this report is to provide fundamental information on stocks covered under our product Portfolio Track. These stocks are likely to witness price up move in

medium to long term. Companies are selected based on certain Fundamental / Technical indicators and it may be possible that our view on these stocks may have been

formed without meeting the company management. All the data appearing in this report is from sources believed to be reliable but we do not guarantee that it is correct oraccurate.

Disclaimer:

This report is prepared for the exclusive use of Sushil Group clients only and should not be reproduced, re circulated, published in any media, website or otherwise, in any

form or manner, in part or as a whole, without the express consent in writing of Sushil Financial Services Private Limited. Any unauthorized use, disclosure or public

dissemination of information contained herein is prohibited. This report is to be used only by the original recipient to whom it is sent.

This is for private circulation only and the said document does not constitute an offer to buy or sell any securities mentioned herein. While utmost care has been taken in

re arin the above we claim no res onsibilit for its accurac . We shall not be liable for an direct or indirect losses arisin from the use thereof and the investors are

requested to use the information contained herein at their own risk.

This report has been prepared for information purposes only and is not a solicitation, or an offer, to buy or sell any security. It does not purport to be a complete description

of the securities, markets or developments referred to in the material. The information, on which the report is based, has been obtained from sources, which we believe to be

reliable, but we have not independently verified such information and we do not guarantee that it is accurate or complete. All expressions of opinion are subject to change

without notice.

9

Sushil Financial Services Private Limited and its connected companies, and their respective directors, officers and employees (to be collectively known as SFSPL), may, from

time to time, have a long or short position in the securities mentioned and may sell or buy such securities. SFSPL may act upon or make use of information contained herein

prior to the publication thereof.

June23,2011

Sanghvi Movers Ltd - Portfolio Track Stock Review - June 11

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