>SANGHVI MOVERS: Performance in line

Sanghvi Movers (SML) reported its performance for Q1FY11 that was in line with our expectations. The company reported a PAT of Rs 24.02 crore, in line with our expectation of Rs 23.2 crore. SML registered 4% YoY revenue growth of Rs 86.14 crore in Q1FY11. The EBITDA margin declined 140 bps YoY to 74.6% in Q1FY11 on the back of an increase in operating expenses and other expenditure. The subsequent EBIDTA stood at Rs 64.26 crore indicating a marginal increase of 2%. The company reported a 4% increase in net profit to Rs 24.02 crore in
Q1FY11 against Rs 23.1 crore in Q1FY10.

Highlights of the quarter
■ In terms of sector wise break up of revenues for Q1FY11, power contributed 29%, wind mill contributed 25%, refinery and gas contributed 13%, cement contributed 17%, steel and metal
contributed 9%, metros, roads, bridges, ports, etc. contributed 2% while other industries contributed 5%

■ During Q1FY11, the effective yield stood at 3.1% per month as compared to 3.6% during the previous year. The average utilisation for cranes in Q1FY11 stood at 81%

Valuation
We expect SML’s performance to improve in the next few quarters due to higher utilisation (~80% vis-à-vis ~74% last year) of its cranes. The company expects an improvement in capacity utilisation on account of increased capex from the power sector. At the current price of Rs 169, the stock is trading at 7.3x its FY11E EPS of Rs 23. We recommend BUY rating on the stock with a target price of Rs 195, 8x FY12E EPS of 24.4.

To read the full report: SANGHVI MOVERS