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Sanghvi Movers Ltd

Sanghvi Movers Ltd -Result highlights.

Sanghvi Movers Ltd (SML) has reported strong performance during Q3FY2009,both on revenue and profitability front. SML’s income from operation grew by 37.8% to Rs88.8 crore led by better-than-expected utilisation and higher yields. The operating performance of the company surprised positively with a 290-basis-point year-on-year (y-o-y) improvement in the operating profit margin (OPM) to 75.7%. on account of a decline in the operating cost.

The net profit increased by 34.8% to Rs23.9 crore as against our estimate of Rs18.6 crore. The profits were higher mainly due to a better top line growth coupled with better operating performance and high other income component. The other income was high due to sale of an old crane, which realised Rs1.9 crore.

The company has added Rs55 crore worth of cranes during the period under review. The total fleet size of SML now stands at 323 cranes, accordingly the gross block of the company now stands at Rs950 crore.

On PE basis the fair value of Rs120 per share based on 5x FY2010E earnings, while on PB basis the fair value works out to be Rs131 per share.

At the current market price the stock discounts its FY2010 earnings by 3x and FY2010E book by 0.7x. Buy the stock with a target of Rs131