Sanghvi is used to make 350crs of operating profit during good times.i.e FY2016,2017. and cashflow from operating activities was more than 250crs. Now they are not looking for Capex in near future + interest cost have been reduced significantly even during bad cycle from > 60 crs to 30-32crs, so net cash flow will be much more.
Prashant
Superbly written. Absolute top class explanation
Company Update:
This is to inform you that, Hon’ble Bombay High Court vide its order dated 03rd February
2021 set aside the assessment Order passed by the Deputy Commissioner for F.Y. 2012-
13 demanding VAT and CST on crane rental income and have granted absolute stay in
our favour.
Just adding my beginner level Technical analysis view on Sanghvi. Price seems to be reversing the trend with good volumes and delivery %.
https://www.icra.in/Rationale/ShowRationaleReport?Id=102202
Sanghvi Movers Limited.PDF (404.7 KB)
Accumulations seems to be underway in Sanghvi movers.
Nippon fund selling as well being absorbed.
UPDATE: 13-April, 2021.
Nippon selling continues. Entry of Gautam Gulati HUF and increase in position by others.
MD interview on ET NOW
I have written a post on my blog (click HERE) in regards to Sanghvi Movers. While my post is more about the mistake I made by NOT buying this stock when it was trading at Rs 100 as it offered a great margin of safety with an upside of atleast 30% at that price, some of the insights in the blogpost maybe useful to investors:
This stock, even when viewed most pessimistically i.e. from a Cigar Butt perspective (a company which generates positive cashflow but only a limited number of years prior to being liquidated), has a value of around Rs 130/share (and that is why it was a value buy at 100). The detailed calculations are also shared in an excel linked in the above post.
What about buying the stock at the current price
Before that, one should understand the revenue growth of the company. Crane rental business quite obviously is dependent on the infrastructure investment cycle. The company showed spectacular growth from FY06 until FY12 by tripling its revenues. As the investment cycle started slowing down from FY12 onwards, the revenues started to fall. The company ended the decade at a revenue of Rs 323 crores in FY20 – almost the same amount as it was 10 years in FY10. Furthermore, in the entire decade this company could not earn a return above its cost of capital. Consequently, you could make a return on this stock only if you bought it at a substantial discount. There is a post by @premsagar above and it is tremendously insightful in this regard.
IMHO, at the current price the market is asking you to take a view whether they company will increase revenues over the medium and/or whether over the long term it can earn a return above its cost of capital or a combination of these two factors. If your answer to this is in the positive then you can consider buying it.
Sanghvi probably should get traction from this project. Recent result presentation shows steps being taken to recover money from Suzlon, Agm mentioned Suzlon being a top client, also Wind sector contribution reducing further from 40% to 36%.
Sanghvi movers AGM notes. (May have missed a few points here and there).
Immense opportunity lies ahead. Patient investing!
Hi All,
Sharing my notes from Sanghvi’s latest credit rating report.
It is good to see a rating upgrade for the company and continuous debt pre-payment despite going through a difficult phase for last 3+ years. Management showed prudence in using cash profit and monetizing non core assets.
Post 2017, management quickly shifted gears from adding capacity to using the cashflow in reducing the debt and making the balance sheet lean. Which I believe will help them perform better over the next growth phase…as company will have the runway to add assets if needed.
Overall, management sounded optimistic for coming years at this year’s AGM.
@rcinvestor999 has captured the discussion beautifully and highlighted the key points. Such notes are very helpful…please keep sharing such good work with the community 
Regards,
Yogansh Jeswani
Disclosure: Invested
As per my view,Business model of SML is not successful in last ten years because of Asset heavy Business model. So,Net Fixed Asset to Turnover ratio is the key factor for valuing SML.
WORKINGS:–
All figures are average of last ten years. source:- Sanghvi Movers Ltd financial results and price chart - Screener
Sales 348 crs
Net Fixed Asset. 1004 crs
Net Fixed Asset to-
-Turnover ratio. .35 (very poor)
OPM. 54 percent
Interest cost. 52 crs
Depreciation cost. 128 crs
Summary:–
Sales 348 crs
Operating Profit ( 54 percent). 188 crs
Less:— Interest cost. 52 crs
Less:—. Depreciation cost. 128 crs
----------------
Yearly Profit. 8 crs
( Other income & Tax not considered)
This is the reason that Shareholders’ Fund of SML is increased by only 81 crs in last Ten years from Mar.12 ( 628 crs )
to Mar.21 ( 709 crs ).
Conclusion:— Performance of the Company will improve only if Fixed Asset to Turnover ratio improves.
Disclosure:-- not invested.
Potential opportunity for Sanghvi Movers. Both JSW & Senvion clients of Sanghvi.
JSW further gets into Wind. More business potential for Sanghvi
623 MW wind installations upto September '21
https://mnre.gov.in/the-ministry/physical-progress
Adani Renewables won 450 MW LoA from SECI
Looking at a strong year for wind installations
Plus with overall capex cycle picking up, should see SML’s yields climbing over the next 12-18 months
I think wind, refineries, steel and cement should be the growth drivers going ahead
Most likely we’ll have a demand supply imbalance for cranes.
Sanghvi Mover 800MT capacity cranes in action…
A technical analysis update on Sanghvi movers.
Relative outperformance of Sanghvi wrt. Ace seems to have started.
Volumes have picked up last few months. Stock has done well with months of consolidation between upmoves. (yellow blocks). The downward descending broadening wedge pattern has played out well, with the target yet to be achieved.
Inox Wind receives 150 MW order from NTPC Renewable Energy. Installation by April 2023.
Should clarify that Inox Wind is a former client of Sanghvi Movers. This order doesn’t directly benefit SML. SML has had trouble collecting receivables from Inox Wind in the past and I believe they don’t do business with Inox Wind anymore.
