Sanghvi Movers

I don’t understand all the fuss over margin dilution due to foray into EPC business which has lower margins than Crane rentals business. The following points should be taken into consideration.

1. Margin expansion/contraction is not the only value driving factor in this case.
2. Increase in ROE is possible with a lower margin business if additional Capex is not required (which is the case in EPC here).
3. Rentals business has high margin but also has high depreciation, depreciation is not an element in EPC business.
4. Ultimately PAT growth matters which may come from EPC without affecting the crane rentals business and without equity dilution.