Sanghvi Movers


(Mehnazfatima) #165

Daily chart of Sanghvi movers with Bollinger bands…the stock is now under volatility compression / band squeeze…further its also under pole and flag consolidation pattern…I am expecting a breakout in the next few days…it can be an upside breakout or it can also be a price breakdown…To be on the safe side, I recommend further buying only above 207 when the probability of upside breakout is quite high…

And if an upside breakout does happen, then do remember that the pole length is around 65…


(Shailesh) #166

Now with this data assuming Avg Crane cost 1.5% of total cost , then per MW potential revenue is Rs 10 lakhs .

Now Assuming annual tenders are around 5000 MW - giving Market Potential revenue for crane player at around - Rs 500 crores

For Sanghavi @ 60 % Mks the revenue at peak will be Rs 300 crores .

Assuming Wind sector gives 70% of Sanfhavi revenue . Max revenue possible is around 500 crores same as FY 2016 … which had EPS of 25 … Assuming for Cyclical company if I give peak earning multiple of 5 , Fair value is RS 125 … Right


(Gaurav Agarwal) #167

I think this assumption needs some reworking. Actual data for Fy19 is available. I roughly remember 10GW/year for fy19 & 20.

This is on very conservative side.


(Shailesh) #168

Yeah that is @ top end , past 3 to 4 years – Tendering has been far lower than top end , plus we have elections - Added to this is concern on transmission side - lot of tender finalised are not seeing development becos of transmission not being place - Hence I have taken 5000 MW development and not order placed / tendering
If more than 5000 MW development ( not tenders / order placed) happens that is bonus …

On Multiple - SM has huge variation in EPS . If I give 10 PE on peak earning it will be like 100 + PE on bad year earning . I looked at another way too … It generated 400 crores FCF in last 10 years when wind was doing really well , ie Rs 40 crores per year … if I assume it will generate Rs 60 crores FCF in future and apply discount rate of 15% . that will give Fair market cap of Rs 400 crores - which is half of today’s market cap which again gives me price of around Rs 125 . Am I missing something ??


(Mehnazfatima) #169

Guys…there is a very detailed report by Stalwart Advisors on sanghvi movers and also a detailed note after meeting the mngt of sanghvi movers and inox wind…due to valuepickr policy I cannot post that report but I can just say that even with very conservative estimates they expect a yearly profit of 165 crores for sanghvi movers…maybe even 250 crores whereas the present market cap of sanghvi is just 800 crores approx


(sri krishna bhutra) #170

Hi,

You should also consider that the depreciation is actually very high whereas average life of crane is 20-25 years. Hence actual cash inflow would be more.

Regards
Krishna
Discl - tracking. May invest.


(Shailesh) #171

I have provided my assumption of fair price above -

Can you provide contra fact both on market potential and why OPMs will be higher than past bull market which will propel profits to greater than 250 crores … on sustainable basis …

This will help me to update my fair price


(Shailesh) #172

Bhai - I am talking of cash flows so depreciation high or low has no meaning . Net Capex incurred is key .


(sjain_13) #173

very valid point Shailesh.

I have one observation which might help SML achieve higher margins assuming there are no pricing pressures. In earlier years, wind was driven by smaller investors investing to avail Accelerated depreciation benefits. Typically these investors place orders very late towards the deadline of Sept. and March and want the projects to be commissioned by Sept or March so that they can avail AD in same year. Now following may have taken place in past -
(1). SML cranes would be underutilised in months of April - June and Oct-Dec
(2). Because large no. of wind mills would be installed in fewer months for Jan-March and July-sept, some orders would have gone to competition.

The current auctions because of huge volumes would require installation round the year in batches and would allow for higher utilisation and higher revenues for SML.

It will be good to understand this better from someone knowledgeable from wind industry or from SML


(Gaurav Agarwal) #174

7.5 gw bidding done in FY19 already; Volumes expected to pick up in FY19", that is the word coming in from JP Chalasani, Group CEO of Suzlon Energy