ICICIDirect lists Sanghvi Motors as out performer.
Current Price: Rs 640*
Target Price: Rs 837
Potential Upside: 31%
Time Frame: 12 months

Sanghvi Movers, India’s largest crane-hiring company, is a proxy on the industrial and infrastructure boom in the country. Its aggressive ramp- up in crane capacity has coincided with a severe shortage of cranes globally, which should lead to robust growth in revenue and profits over the next few years. We initiate coverage on the company with an OUTPERFORMER rating.

At the current price of Rs 640, the stock is trading at a P/E multiple of 12.5x its FY07E EPS of Rs 50.9 and 10.7x its FY08E EPS of Rs 59.7. On an EV/EBIDTA basis, the stock is available at 6.3x FY07E earnings and 5.4x FY08E earnings. Given the company’s dominant position in the crane-hiring market and the capex boom in India, we believe that the stock is undervalued. We rate the stock an OUTPERFORMER with a 12-month price target of Rs 837, at 14x FY08E earnings, an upside potential of 31%.