Sanghvi Movers

Investors with a medium-term perspective can consider selling at least a part of their holdings in the stock of Sanghvi Movers, a leading player in the crane hiring business, to lock into profits. The stock has almost trebled in value since our last ‘buy’ recommendation. While we continue to be positive on the long-term growth prospects of the company, given its strong market position, large fleet size and business with leading corporates, the stock price gains provide very little margin of safety for the risks to the earnings outlook for the next one year. At the current market price of Rs 185, the stock trades at about 9 times its likely FY10 per share earnings.

For the current fiscal, revenue growth for Sanghvi may remain subdued given lower demand. Though opportunities in power sector are expanding, the company may still go on to report a dip in overall sales for the year as other sectors continue to see sluggish offtake. The company’s high reliance on power projects for revenue growth also makes revenues susceptible to execution delays in power projects.

via BL