What do you expect from your investment? A highest possible return on the principal, lowest possible expenses and a proven track record of performance over a certain period to keep doubting Thomases at bay. The other day, I got curious about finding all such elements in a listed company and here is what I got.
To begin with, from all the publicly-traded companies (around 3,187), I extracted those who had a profit margin of more than 20 per cent in the last 5 years despite the economic crisis of 2008-09. To my surprise, 3,123 companies were out my list at one go. Next, I checked how many of the remaining 64 companies paid handsomely to those who had put in their money. For this I skimmed out only those who had Return on Capital Employed (or Return on Investment) of more than 15 per cent for all the past 5 years. What was left was 29 such companies.
To further pare down the list I picked only those which were cheaply available, i.e., with price to earning (P/E) of less than 12. The end result was: 15 companies. Almost all of them were quite well-known but what caught my attention was a company hitherto hidden from my view. That is how I started analysing Sanghvi Movers.
Sanghvi Movers is a crane-leasing company, and claims to be the largest in Asia. It has a fleet of around 400 cranes of all possible sizes and capacity, serving infrastructure and power projects. With EBITDA margin of more than 75 per cent in the past 5 years, it claims huge depreciation to leave behind an ample cash flow and less taxes. The company has 12 centers across India and also ekes out 1 per cent of its revenue from wind generation. It generates 70 per cent of the revenue from power and windmill sector and the rest from refinery and gas, cement, steel and metal.
With a large number of ongoing infrastructure projects, the company has good future prospects. The best part of this stock is that no matter whether the aforementioned projects perform or not, it is still going to make money as cranes are indispensable for such projects. Trading at earning multiple of just 4.6 and price to book value of 0.72, the stock is a really cheap bargain.
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