Sanghvi Movers

Recommendation: Buy
Price target: 350
Current market price: Rs290

Q3FY2008 results: First-cut analysis

Result highlights

For Q3FY2008 Sanghvi Movers Ltd (SML) has reported a spectacular growth of 65.4% in its top line to Rs64.4 crore. The growth is above our expectation.
The operating profit of the company grew by 66.9% to Rs46.9 crore during the quarter. The operating profit margin improved by 60 basis points to 72.8% as against 72.2% in Q3FY2007.The operating profit margin for the company has been improving on the back of better capacity utilisation and lower maintenance cost.
The interest cost increased by 13.2% to Rs7.5 crore while, the depreciation charge was up 33.3% to Rs11.7 crore in Q3FY2008.
The profit after tax grew by a whopping 111.2% to Rs17.8 crore, which is way above our expectation. The robust top line growth and stable operating performance led to a strong growth in the profits of the company.
The company plans to acquire100 cranes at a total cost of Rs550 crore over the next 18 months. These will include 72 second hand cranes from the USA worth Rs160 crore, mainly for the use of the power sector.