Sanghvi Movers Ltd. share price target

Sanghvi Movers Ltd (SML) witnessed a moderate YoY growth of 4.2% to Rs.5531 Mn compared to Rs.5308 Mn in FY16, mainly contributed by the wind mill sector (highest contributing sector) witnessing a growth of 21.3%, followed by Steel & Metal sector, however the growth in the sectors like Power, Refinery & Gas and Cement witnessed a drop of -18.1%, -33.0% and -58.3% respectively. The utilization and average yield per month during the year witnessed a drop to 78.0% & 2.8% respectively from 82.0% & 3.0% in FY16.

Flat Growth YTD; Plans to Nearly Double the Capex in FY18EContinue to witness flat growth during 9MFY17 - SML witnessed a growth of 5.6% during 9MFY17 to Rs.3828 Mn compared to Rs.3623 Mn in 9MFY16 on account of the increased capacity utilisation & better gross yield rates during theperiod which stood at 75.0% & 2.7% respectively compared to 9MFY16 at 59.0% & 2.2% respectively. The sectors which witnessed growth during 9MFY17 includeWind sector with highest contribution, grew by 22.3% followed by Power, Steel &Metal sectors growing at 5.6% and 40.9% respectively.

Sanghvi Movers (SGM) 3QFY17 revenue (Rs 1.3bn, 2% YoY) was ~8% below our estimates, as gross block yield declined to ~2.58% (vs. ~2.77% QoQ). Utilisation of cranes improved to ~80% (vs. ~66% QoQ). While lower freight charges and employee costs led to better-than-expected EBTIDA margins (66.9%, 110bps YoY), higher depreciation and taxes led to a 23% miss in our APAT (Rs 234mn, -8% YoY) estimate.

Decent Performance During H1FY17; CapEx on Track for the Year: Flat growth witnessed during H1FY17: On the Half yearly basis, revenueswitnessed a 7.5% YoY growth registering Rs. 2,497 Mn during H1FY17 compared to Rs. 2,322 Mn in H1FY16. EBITDA stood at Rs. 1,532 Mn in H1FY17 compared toRs. 1,514 Mn in H1FY16, with EBITDA margins at 61.4% in H1FY17 a drop of -384bps when compared to 65.2% in H1FY16.

Sanghvi Movers (SGM) 2QFY17 financial performance was impacted by the seasonal spillover of de-hiring of cranes getting pushed to 2QFY17, which resulted in net revenues/EBITDA being ~24/29% below estimates. Crane utilisations fell to ~66% (~79% in 1QFY17) while gross block yields remained stable at ~2.77% (~2.80% in 1QFY17).

Largest Crane Rental Company Adapting to Changing Needsof Wind Mill Sector:SML continues to draw major revenues from wind mill sector - Government'starget to add 4000 MW wind power capacity during FY17E and the momentum going ahead to be favourable for SML. We expect wind power capacity addition towitness a growth of 14.8% during FY16-18E leading to a growth of 12.8% in the SML's revenue. The contribution from other sectors such as Power Plant, Refinery/Petroleum products, Cement, Steel & Metals and others are expected to pick up with moderated capacity additions in the next two years.

Sanghvi Movers (SGM) 1QFY17 revenues/EBITDA were ~8.2/11.5% below estimates on account of a seasonal fall in crane utilisation to ~79% (~84% in 4QFY16) and yield to ~2.8% (~3.15% in 4QFY16).

Sanghvi Movers Ltd. (SML), a flagship company of the Sanghvi Group,operating since 1989, is the largest crane hiring company in India, 3rd largest in Asia and 9th largest in the world . It has a fleet of over 400 medium to large sized heavy duty hydraulic and crawler cranes with capacity ranging from 20 tons to 800 tons. The crane hiring business is the main business line for SML contributing around 99% of the turnover SML also provides basic engineering and lift planning services along, as it helps in determining the time, labor, type of equipment required and flow of work.These cranes are used in the power, refineries, steel, cement and construction sectors, for purposes such as plant...

Sanghvi Movers (SGM) delivered a strong 3QFY16. Revenues/EBITDA was ~6/13% above our estimates on account of increased crane utilisation rates of ~83% (~80% in 2QFY16) and yields of ~3.06% (~3.05% in 2QFY16). EBIDTA margins expanded ~800bps YoY (-241bps QoQ) to ~66.8% (~424bps above our estimates), driven by lower other expenses and freight costs.

Sanghvi Movers (SGM) delivered a robust 2QFY16 performance as revenues/EBITDA were ~19/23% above our estimates, on account of increased crane utilisation rates of ~80% (~79% in 1QFY16) and yields of ~3.05% (~2.86% in 1QFY16). EBIDTA margins expanded by ~351bps QoQ to ~69.2% (~218bps above our estimates), driven by lower other expenses and employee costs.

Sanghvi Movers Ltd. (SML) is the largest crane rental company in India, having a fleet size of 382 medium to large sized heavy duty ? hydraulic, telescopic and crawler cranes with capacities ranging from 20 MT to 750 MT.