Buy Sanghvi Movers, target Rs 370: Anand Rathi

Anand Rathi has a buy call on Sanghvi Movers Ltd. with a target price of Rs 370 .The current market price of Sanghvi Movers Ltd. is 258.4 Time period given by analyst is year when Sanghvi Movers Ltd. price can reach defined target.
Flat FY17Sanghvi’s revenue and profitability were both flat in FY17. Its Q4 margin expanded 773bps to 73.1 per cent on account of operating leverage. The wind-energy contribution to revenue rose to 71 per cent in FY17, from 61 per cent in FY16 on account of greater spending in the sector. The power and refinery & gas sectors reported slower growth during the year. With rising utilisation and yield (~2.8-3 per cent), we expect PAT to clock a 11 per cent CAGR over the next FY17-FY19.
Addition to its crane fleetWith a about 75 per cent market share in higher tonnage cranes, Sanghvi focuses on investing in heavy-duty cranes. It has a wind-turbine market-share of 70-75 per cent. It plans to acquire 25 cranes in FY18 at an estimated Rs 3.9bn, to be funded by 25 per cent equity (on selling 12 cranes) and bank finance. At present, the company operates at about 78 per cent capacity (down from 82 per cent in FY16).
OutlookIt intends to hold its debt-equity ratio in FY18 at less than 0.7:1. We expect it to report robust growth in earnings following greater expenditure on renewable energy and an expected pick-up in industrial capex.
Valuation We maintain our Buy rating, with a price target of Rs 370 (earlier Rs 353) based on 12x FY19e EPS.
RiskLower spending on infrastructure and wind power.