Sanghvi Movers

@First_Principles Very nicely captured .

I maintain my stance that the PAT of Sanghvi movers is logically and legally as per rules deflated (aggressive depreciation )
•The right way to see the valuation is Cash PAT multiple and not PE multiple .
•Even in Cash Pat Multiple the Valuation is deflated as assets are depreciation in circa 5 years or so whereas assets have life of 25/30/35/40 years .Recently they sold a crane of 1962 !!
•Hence better to calculate the life time value of these assets (2490 Cr is Gross Block ) which has huge earnings capacity !

First way (my way –crude approach) :

1.The future value of 2,490cr with a 15% annual yield (they now get 24% )over 25 years is approximately 81,574 cr
2.Present value of ₹81,574 crore after 25 years with an annual inflation rate of 6% is approximately ₹18,998 crore.

Second way (traditional way –DCF approach):
•Discounted cash flow (DCF) of an investment of 2,490 Cr with a 15% per annum discount rate over 25 years and a terminal value growth rate of 2% is approximately 17,386 Cr

Current market cap is only 5300 cr .
What can go wrong – Have taken yield at 15% which is 15/24 =63% capacity utilisation .Though currently for last 3 years its at an average of 80%+ it can be much lower than my assumption for longer period of time .Hence I can be completely wrong .

Will calculate this years (24-25) financials and share on Monday .