From what I understand from the article, some players have already bought land, albeit expensive, to execute the projects.
The way I look at it is that when all issues are eventually resolved and windmills are being put up (even if at higher costs to the bid winners), demand for cranes to put them up will increase dramatically. This should also increase yields. I wonder if pace of future auctions will start picking up post successful execution of earlier auctions.
Suzlon heading for Bankruptcy.
What it means to Sanghvi movers
Installed Capacity numbers for Dec-19 are out
http://www.cea.nic.in/reports/monthly/installedcapacity/2020/installed_capacity-01.pdf
Wind Installation Figures for
2018 = 1766 MW
2019 = 1580 MW
9M2020 = 1879 MW
It seems we may end up with somewhere near 2500 MW for wind capacity installation by the end of Mar-20
The recent tranche IX which went unsold has now been re issued without ceiling tarrifs
In an interesting update, MNRE has told that ultra mega renewable energy parks (25GW each) have got the necesseary defense and state govt. clearances and power transmission facilities will be ready in 24 months to these parks. is this the catalyst we were awaiting for?
Positive news flow coming in at the bottom. Possible major cycle ahead.
https://www.tradingview.com/x/CCkg79GG
Rishi C. Sanghvi bought 50,000 shares apprx value 54.5 lakhs on 16-mar-20
The dispensation will extend to vehicles and equipment including energy storage batteries, electrical devices and maintenance tools. Restrictions on public gatherings will be waived where the operation and maintenance of renewable plants requires it, the order statesâŚ
The disruption of corona will be minimized for renewables,
Update on Sales Tax Demand received by the Company from
Asst. Commissioner of Sales Tax Pune for FY 2008-09 under
MVAT Act aggregating to Rs. 120.26 Crores regarding
âtransfer of right to use the goodsâ.
https://www.bseindia.com/xml-data/corpfiling/AttachLive/9cd4f66a-e267-47e5-954a-d475d2cec105.pdf
AGM NOTES:
ORDER BOOK - AR (135CRS) - AGM UPDATE (150 CRS);
DEBT REPAYMENT: FY21 - 93 CRS
REPAID 50 CRS, UNDRAWN CREDIT FACILITY AVAILABLE 50 CRS
BIG ORDERS:
400 MW TELENGANA THERMAL POWER - DEPLOYING MORE CRANES
9MTPA BSVI FACILITY - RAJASTHAN
4PSU JV FERTILIZERS FOR 400T UREA REACTOR - LARGEST CRANE DEPLOYED
JSW DOLVI
L&T - PRESENT ACROSS ALL VERTICLES (L&T ORDER BOOK 27,000 CRS +)
DEDICATED FREIGHT CORRIDOR - CRANES BEING USED
SUZLON - O&M ACTIVITY - CRANES DEPLOYEDâ ERECTION ACTIVITY DELAYED, EXPECT ORDERS TO PICK UP H2FY21
70% MARKET SHARE IN WIND SECTOR
PLAN TO BE DEBT FREE IN 18-24 MONTHS IF BUSINESS PICKS UP
NO BIG CAPEX PLANNED NEXT 12-15 MONTHS
EVEN IF DEMAND INCREASES, SUFFICENT CAPACITY PRESENT
WILL LOOK FOR BETTER YIELD PROJECTS, BETTER PAYING CUSTOMERS, CATER TO TOP CUSTOMERS
POST DEBT FREE WILL LOOK FOR GIVING DIVIDNEDS OR UNDERTAKE BUYBACKS
398 CRANES, AVG. AGE 23 YEARS APPROX.
TRACTION AND DEMAND BEING SEEN IN O&G, STEEL, FERTILIZERS, ROAD, CEMENT SECTORS.
Thank you for AGM update.
Do they have given any topline guidance for Fy21?
Prashant
Any idea on the current status of this project?
It is huge hybrid project (41.5 GW), being directly reviewed by PM Modi ji.
Dead line for the completion of the project is 2022
In a hybrid project I think wind farm is erected first for practical reasons.
Does anyone else here see Sanghvi as a potential turnaround story?
Combination of aggressive deleveraging, promoter buying, Industry going through rough time and potential tailwinds from wind energy pickup (next 2 years are critical for India to achieve its renewable target).
Weâre talking about a conservative 80cr+ of operating cash flow with no major capex and expected financial outflows such as interest payments to reach near 0 in 2-3 years time available at 400cr mcap with upside optionalities.
Also, any suggestion on how to track actual wind energy installations happening currently?
The mgmt over at Action Construction Equipment has given a very bullish outlook for their business for the next few years. Plus they have been buying their stock regularly as well. Not sure how much the crane business is for Sanghvi but maybe similar outlook for that. Certainly there has been a lot of positive action on the technical charts for both these cos.
BANG ON AKSHAT, BANG ON!!!
Dependence on Wind slowly reducing as compared to previous cycles, traction coming in from other sectors like O&G, Fertilizers, Chemicals, Roads/Infra, Power. This upcycle could be much bigger and longer.
At 400cr mcap, bottom of the cycle, 300cr + debt repaid last 4 years, no capex next 2 years, gross block of 2000cr plus, possibility of becoming debt free and post that hopefully a 100-150 cr buyback to reward equity holders.
Capacity utilisation for cranes is still around 50 %.As long as capacity utilisation levels remain low, they will find it difficult to make profits . This low capacity utilisation is due to reduction of wind power. It appears that this reduction in demand has not been replaced through other sectors. Sale of land for 14cr+ has helped the cash flow of the Co and helped prepay debt.
If they are at 50% utilisation and still making approx 120cr of operating cash flows, and paying down debt as planned, then I doubt we can say that itâs difficult for them to make profits right?
Also, land sale of 15cr could be immaterial considering they have paid down 300+Cr of debt in 3 yearsâŚ
Would love to hear your views on this!
