The September quarter results reveal a company navigating challenging operational dynamics. Whilst year-on-year comparisons paint an encouraging picture with net sales advancing 34.44% to ₹209.90 crores and net profit climbing 24.55% to ₹36.27 crores, the sequential performance raises concerns. Revenue contracted sharply by 23.21% from the previous quarter's ₹273.36 crores, and profitability declined even more steeply, with net profit falling 27.84% from ₹50.26 crores in Q2 FY26.
The company's profitability metrics show concerning deterioration. The PAT margin compressed to 17.28% in Q3 FY26 from 18.39% in the preceding quarter and 18.65% in the year-ago period. Operating margins, whilst improving sequentially to 38.49% from 36.42%, remain substantially below the 46.86% achieved in Q3 FY25, indicating sustained pressure on operational efficiency.
Financial Performance: Sequential Weakness Despite YoY Strength
Sanghvi Movers' third quarter financial performance presents a tale of two narratives. On an annual comparison basis, the crane rental major demonstrated solid momentum with revenue growth of 34.44% reaching ₹209.90 crores, driven by increased crane deployment and favourable industry dynamics. However, the quarter-on-quarter decline of 23.21% signals potential cyclicality in project execution or temporary operational headwinds.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | PAT Margin |
|---|---|---|---|---|---|
| Sep'25 (Q3) | 209.90 | -23.21% | 36.27 | -27.84% | 17.28% |
| Jun'25 (Q2) | 273.36 | +2.22% | 50.26 | -6.63% | 18.39% |
| Mar'25 (Q4) | 267.42 | +28.59% | 53.83 | +62.73% | 20.13% |
| Dec'24 (Q3) | 207.96 | +33.20% | 33.08 | +13.60% | 15.91% |
| Sep'24 (Q2) | 156.13 | +3.67% | 29.12 | -28.08% | 18.65% |
| Jun'24 (Q1) | 150.61 | -9.84% | 40.49 | -33.93% | 26.88% |
The operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) stood at ₹80.79 crores in Q3 FY26, declining 18.85% quarter-on-quarter from ₹99.55 crores. This translated to an operating margin of 38.49%, representing a sequential improvement of 207 basis points but a substantial year-on-year compression of 837 basis points from the 46.86% achieved in Q3 FY25.
Employee costs increased to ₹21.73 crores from ₹18.28 crores in the previous quarter, suggesting higher wage inflation or increased headcount to support operations. Interest expenses remained relatively stable at ₹7.38 crores, marginally higher than the ₹7.32 crores in Q2 FY26, whilst depreciation held steady at ₹31.30 crores. The effective tax rate stood at 27.17%, consistent with the company's historical range of 26-28%.
Margin Dynamics Under Pressure
The most concerning aspect of Q3 FY26 results is the persistent margin compression. Operating margins excluding other income have declined from 68.71% in December 2023 to 38.49% in September 2025, indicating structural challenges in maintaining pricing power or controlling costs. The PAT margin of 17.28% represents a significant deterioration from the 36.69% achieved two years ago, reflecting both operational pressures and higher interest costs as the company expanded its debt to fund fleet expansion.
Operational Challenges: Return Metrics Signal Caution
Sanghvi Movers' operational efficiency metrics reveal underlying challenges that warrant investor attention. The company's return on equity (ROE) stands at 15.60% on an average basis and 14.32% for the latest period, which, whilst respectable, represents a decline from historical levels and lags behind the superior returns generated during the company's peak operational efficiency periods.
The return on capital employed (ROCE) presents a more concerning picture at just 7.20% on average, with the latest reading improving to 16.51%. This significant variance suggests volatility in capital efficiency and raises questions about the company's ability to generate consistent returns on its substantial asset base of cranes and equipment. For a capital-intensive business like crane rentals, sustainable ROCE above 15% is typically considered healthy.
The company's balance sheet reveals a notable increase in leverage. Long-term debt surged to ₹303.03 crores in March 2025 from ₹93.53 crores in March 2023, reflecting aggressive fleet expansion. The debt-to-equity ratio reached 0.41 times in the first half of FY26, marking the highest level in recent periods. Whilst the company maintains adequate interest coverage with EBIT-to-interest ratio averaging 7.06 times, the rising debt burden in a margin-compression environment requires careful monitoring.
⚠️ Operational Concerns
The company's financial trend has been classified as "NEGATIVE" since December 2025, with key concerns including the lowest ROCE at 12.25% for the half-year period, highest interest costs at ₹9.27 crores quarterly, and the highest debt-equity ratio at 0.41 times. The operating profit-to-interest coverage has also declined to its lowest at 9.21 times, indicating reduced cushion for debt servicing.
Industry Context: Navigating Cyclical Headwinds
The crane rental industry operates in a cyclical environment closely tied to infrastructure development, construction activity, and industrial capex cycles. Sanghvi Movers, with its fleet of over 346 medium to large-sized heavy-duty telescopic and crawler cranes, commands a leadership position in India and Asia. However, the sequential revenue decline of 23.21% in Q3 FY26 suggests potential softness in project execution or timing delays in major infrastructure projects.
The company's performance over the past year shows significant volatility. Net sales grew 71.90% in FY25 to ₹782 crores, demonstrating strong demand recovery post-pandemic. However, the quarterly trajectory reveals uneven momentum, with revenue oscillating between ₹150 crores and ₹273 crores across recent quarters. This volatility is characteristic of project-based businesses where large contract wins or completions can significantly impact quarterly performance.
Operating margins have compressed substantially from the exceptional 56.30% achieved in FY23 to 42.20% in FY25, and further deteriorated to 38.49% in Q3 FY26. This margin erosion reflects intensifying competition, pricing pressures, and rising operational costs including fuel, maintenance, and employee expenses. The crane rental industry has witnessed increased competitive intensity as regional players expand and pricing discipline weakens.
Peer Comparison: Valuation Discount Justified by Weaker Returns
Sanghvi Movers trades at a significant valuation discount to most peers in the construction equipment and automobile sectors, which appears justified given its operational metrics and recent performance trajectory. The company's price-to-earnings ratio of 15.98 times compares favourably to peers like Action Construction Equipment at 25.89 times, Olectra Greentech at 58.56 times, and SML Isuzu at 34.34 times.
| Company | P/E (TTM) | P/BV | ROE (%) | Div Yield (%) | Debt/Equity |
|---|---|---|---|---|---|
| Sanghvi Movers | 15.98 | 2.29 | 15.60 | 0.62 | 0.19 |
| Action Const. Eq. | 25.89 | 6.14 | 21.14 | 0.22 | -0.20 |
| Olectra Greentech | 58.56 | 7.46 | 8.49 | 0.04 | 0.21 |
| Ajax Engineering | 22.04 | 4.58 | 23.50 | NA | -0.53 |
| SML Mahindra | 34.34 | 12.26 | 20.75 | 0.48 | 0.48 |
| VST Tillers Tractors | 53.27 | 4.79 | 10.59 | 0.34 | -0.58 |
However, the valuation discount is warranted when examining return metrics. Sanghvi Movers' ROE of 15.60% trails Action Construction Equipment (21.14%), Ajax Engineering (23.50%), and SML Isuzu (20.75%). The company's price-to-book ratio of 2.29 times is the lowest in the peer group, reflecting market scepticism about the sustainability of current profitability levels and the quality of the expanded asset base.
The company's dividend yield of 0.62% provides some income support, though it remains modest given the low payout ratio of 13.82%. With a latest dividend of ₹2 per share declared in September 2025, the company retains most earnings for debt reduction and fleet maintenance, which appears prudent given the elevated leverage levels.
Valuation Analysis: Fair Pricing with Limited Upside
Sanghvi Movers' current valuation reflects the market's balanced assessment of its growth prospects against operational challenges. Trading at ₹320.10 with a market capitalisation of ₹2,772 crores, the stock has delivered 19.31% returns over the past year, outperforming the Sensex's 7.07% gain and generating positive alpha of 12.24 percentage points.
The company's price-to-earnings ratio of 15.98 times sits below the industry average of 31 times, suggesting either a valuation opportunity or justified discount due to execution concerns. The price-to-book ratio of 2.29 times compares to a book value per share of ₹131.97, implying the market values the company at 2.29 times its net asset value. For a capital-intensive crane rental business, this multiple appears reasonable given the depreciation schedules and asset utilisation challenges.
The enterprise value-to-EBITDA multiple of 8.26 times appears fair for a cyclical business with moderate growth visibility. The EV-to-sales ratio of 3.13 times reflects the capital-intensive nature of the business and modest profitability margins. The company's valuation grade has oscillated between "Fair" and "Expensive" over recent months, most recently classified as "Expensive" with frequent revisions, indicating market uncertainty about the appropriate valuation level.
The stock currently trades 22.48% below its 52-week high of ₹412.90 achieved earlier in the fiscal year, and 56.15% above its 52-week low of ₹205.00. This positioning suggests the market has partially discounted near-term challenges whilst maintaining some optimism about long-term prospects. However, with the overall valuation assessment marked as "EXPENSIVE" and the Mojo score at just 31 out of 100, the risk-reward appears unfavourable at current levels.
Shareholding Pattern: Institutional Exit Continues
The shareholding pattern reveals concerning trends with institutional investors progressively reducing their stakes. Foreign institutional investors (FIIs) decreased their holdings to 1.46% in December 2025 from 2.94% in December 2024, representing a cumulative decline of 148 basis points over four quarters. This sustained selling pressure from sophisticated investors signals caution about the company's near-term prospects.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 |
|---|---|---|---|---|---|
| Promoter Holding | 47.25% | 47.25% | 47.25% | 47.25% | 47.25% |
| FII Holding | 1.46% | 1.71% | 1.40% | 2.11% | 2.94% |
| Mutual Fund | 0.42% | 0.42% | 0.64% | 2.41% | 3.06% |
| Other DII | 0.98% | 0.97% | 0.97% | 0.84% | 0.83% |
| Non-Institutional | 49.89% | 49.64% | 49.74% | 47.39% | 45.92% |
Mutual fund holdings have declined even more dramatically, falling from 3.06% in December 2024 to just 0.42% in December 2025. The combined institutional holding now stands at a mere 5.36%, indicating limited conviction from professional investors. In contrast, non-institutional holdings have increased from 45.92% to 49.89% over the same period, suggesting retail accumulation even as institutions exit.
Promoter holding remains stable at 47.25% with no pledging, which provides some comfort regarding management confidence and corporate governance. The promoter group, led by Rishi Chandrakant Sanghvi (28.82%) and family members, maintains significant skin in the game. However, the absence of promoter buying during the recent stock price correction raises questions about their assessment of current valuation attractiveness.
Stock Performance: Short-Term Weakness, Long-Term Strength
Sanghvi Movers' stock performance presents a mixed picture across different time horizons. Over the past year, the stock has generated returns of 19.31%, significantly outperforming the Sensex's 7.07% gain and delivering positive alpha of 12.24 percentage points. However, recent momentum has turned decidedly negative with the stock declining 13.59% over the past three months and 7.20% over the past month.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +5.99% | +1.59% | +4.40% |
| 1 Month | -7.20% | -1.74% | -5.46% |
| 3 Months | -13.59% | +0.32% | -13.91% |
| 6 Months | +17.10% | +3.77% | +13.33% |
| 1 Year | +19.31% | +7.07% | +12.24% |
| 3 Years | +87.58% | +38.13% | +49.45% |
| 5 Years | +483.86% | +64.75% | +419.11% |
The longer-term performance remains impressive with three-year returns of 87.58% and five-year returns of 483.86%, substantially outperforming the broader market. This historical outperformance reflects the company's successful fleet expansion, market share gains, and the cyclical recovery in infrastructure spending post-pandemic. However, the two-year return of -25.89% underperformance versus the Sensex's 15.78% gain highlights the stock's vulnerability during challenging periods.
Technical indicators paint a cautious picture. The stock currently trades in a "MILDLY BEARISH" trend after shifting from "Bearish" on February 4, 2026. The stock is trading below all major moving averages including the 5-day (₹307.51), 20-day (₹303.81), 50-day (₹319.50), 100-day (₹347.07), and 200-day (₹321.34) moving averages, indicating weak technical momentum. The high beta of 1.57 suggests the stock exhibits 57% higher volatility than the broader market, making it suitable only for risk-tolerant investors.
Investment Thesis: Caution Warranted Despite Market Leadership
Sanghvi Movers' investment case rests on conflicting factors that make it a challenging proposition for most investors at current levels. The company's dominant market position in crane rentals, extensive fleet of 346+ cranes, and exposure to India's infrastructure growth story provide long-term structural tailwinds. However, near-term execution challenges, margin pressures, rising leverage, and negative financial trends significantly constrain the investment appeal.
The proprietary Mojo score of 31 out of 100 with a "SELL" rating reflects these concerns. The score has declined from "HOLD" territory (60 points) in August 2025, indicating deteriorating fundamentals. The assessment across key parameters reveals: negative near-term drivers with both quarterly financial trend and technicals in bearish territory; average quality grade reflecting moderate long-term financial performance; fair valuation that offers neither significant discount nor premium; and an overall cautious outlook given the mixed signals.
The company's quality grade has been downgraded from "Good" to "Average" in November 2025, reflecting concerns about return metrics and operational efficiency. The average ROCE of 7.20% is particularly weak for a capital-intensive business, though the latest reading of 16.51% shows some improvement. The ROE of 15.60%, whilst respectable in absolute terms, represents lower capital efficiency compared to historical levels and several peers.
Key Strengths & Risk Factors
KEY STRENGTHS
- Market Leadership: Largest crane rental company in India and Asia with fleet of 346+ cranes providing competitive moat
- Infrastructure Exposure: Well-positioned to benefit from India's infrastructure spending cycle and industrial capex revival
- Strong YoY Growth: Net sales up 34.44% YoY and net profit up 24.55% YoY demonstrating demand recovery
- Stable Promoter Holding: 47.25% promoter stake with zero pledging indicates management confidence
- Reasonable Valuation: P/E of 15.98x below industry average of 31x offers relative value
- Long-Term Track Record: Five-year returns of 483.86% demonstrate wealth creation potential during favourable cycles
- Improving ROCE: Latest ROCE of 16.51% shows sequential improvement from average of 7.20%
KEY CONCERNS
- Sequential Decline: Revenue down 23.21% QoQ and profit down 27.84% QoQ indicating momentum loss
- Margin Compression: Operating margin declined from 46.86% to 38.49% YoY; PAT margin from 18.65% to 17.28%
- Rising Leverage: Long-term debt surged to ₹303 crores with debt-equity ratio at highest level of 0.41x
- Institutional Exit: FII holdings down from 2.94% to 1.46%; MF holdings from 3.06% to 0.42% over past year
- Weak ROCE: Average ROCE of just 7.20% inadequate for capital-intensive business model
- Technical Weakness: Stock below all moving averages with "Mildly Bearish" trend classification
- Negative Financial Trend: Classified as "NEGATIVE" with lowest ROCE, highest debt-equity, and declining interest coverage
Outlook: What to Monitor in Coming Quarters
The trajectory for Sanghvi Movers over the next 12-18 months will largely depend on the company's ability to stabilise margins, manage leverage, and demonstrate consistent revenue growth. Investors should closely monitor several key parameters to assess whether the current challenges represent temporary headwinds or structural deterioration in the business model.
POSITIVE CATALYSTS
- Margin stabilisation above 40% indicating pricing power recovery
- Consistent QoQ revenue growth for three consecutive quarters
- ROCE sustained above 15% demonstrating improved capital efficiency
- Debt reduction or stable leverage despite fleet expansion
- Institutional buying or stabilisation in FII/MF holdings
RED FLAGS TO WATCH
- Further sequential revenue declines beyond Q3 FY26
- Operating margins falling below 35% for two consecutive quarters
- Debt-equity ratio exceeding 0.50x or interest coverage below 6x
- Continued institutional selling with FII holdings below 1%
- ROCE remaining below 10% indicating poor capital allocation
The crane rental industry's outlook remains tied to government infrastructure spending, private sector capex, and real estate activity. With the Indian government's continued focus on roads, ports, and industrial corridors, the medium-term demand environment appears supportive. However, execution challenges, competitive intensity, and margin pressures could persist in the near term.
Investment Verdict: Hold for Existing Investors, Avoid Fresh Entry
Mojo Score: 31/100
For Fresh Investors: Avoid initiating positions at current levels. The combination of deteriorating financial trends, margin compression, rising leverage, and institutional exodus creates an unfavourable risk-reward profile. Wait for clear evidence of margin stabilisation, consistent revenue growth, and technical trend reversal before considering entry. Better opportunities exist in the capital goods space with stronger execution visibility.
For Existing Holders: Consider reducing positions on any technical bounce towards ₹340-350 levels. The negative financial trend, bearish technical setup, and low Mojo score of 31 suggest limited upside potential in the near term. Long-term investors with high risk tolerance may hold with a strict 15-20% stop-loss, but should closely monitor Q4 FY26 results for signs of operational improvement. The stock's high beta of 1.57 makes it unsuitable for conservative portfolios.
Fair Value Estimate: ₹280-300 (12-16% downside from current levels of ₹320)
Note: ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. The author and publication do not hold any positions in the securities mentioned and have no business relationship with the company discussed.
