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Freight rates in tanker segment reported significant increase on a YoY basis from low base
in 3QFY10 and marginal recovery on a QoQ basis in crude tanker segment (i.e., Dirty
Index). Baltic Dirty Index for crude carriers increased by 31.2% YoY to 848, while Baltic
Clean Index for product carriers increased by 34.2% YoY to 684. However, product rates
remained weak on QoQ with 6.7% decline in Baltic Clean Index. The freight rates for very
large crude carriers (VLCC) remained weak compared to smaller vessels. The time charter
yield in VLCC declined by 61.4% YoY to USD6,832pd. The freight rates index for dry bulk
commodity, Baltic Dry bulk Index (BDI) declined by 31.7% on a YoY basis (marginal increase
of 0.6% on QoQ basis) to 2,363 in 3QFY11.
GE Shipping
Revenue is expected to decline by 6% YoY (an increase of 5.2% QoQ) from INR7.0bn
in 3QFY10 to INR6.6bn in 3QFY11. The company acquired 1 offshore platform vessels
and sold 3 vessels (1 Aframax, 1 GP Product and 1 Handymax) during the quarter.
EBIDTA is expected to increase by 43.2% YoY from INR1.9bn in 3QFY10 to INR2.8bn
in 3QFY11. The margins are expected to improve from 28.2% in 3QFY10 to 43.0% in
3QFY11 compared to 41.1% in 2QFY11 mainly due to improvement in tanker freight
rates on a YoY basis.
Net profit is expected to increase by 27.5% on a YoY basis (16.1% QoQ) from INR1.28bn
in 3QFY10 to INR1.63bn in 3QFY11. We expect an EPS of INR10.7 in 3QFY11.
Essar Shipping Port and Logistics
Revenue is expected to increase by 8.6% YoY (16% QoQ) from INR8.0bn in 3QFY10
to INR8.7bn in 3QFY11, mainly due to commencement of 30mtpa bulk terminal at
Hazira, Gujarat. The company is insulated from volatility in shipping freight rates due
to long-term contacts for its full fleet.
EBIDTA is expected to increase by 15.0% YoY from INR2.6bn in 3QFY10 to INR3.1bn
in 3QFY11. EBIDTA margins are expected to remain ~35.4% in 3QFY11.
Net profit is expected to increase from INR209.5m in 3QFY10 to INR259.1m in 3QFY11
translating into EPS of INR0.4.
Mercator Lines
Revenue is expected to increase by 39.1% YoY from INR4.7bn in 3QFY10 to INR6.5bn
in 3QFY11 mainly due to increased in coal mining and logistics business along with
recovery in tanker freight rates on YoY basis. The revenue from coal mining is expected
to increase by 80% YoY from INR1.4bn in 3QFY10 to INR2.7bn in 3QFY11.
EBIDTA is expected to increase by 21.8% YoY from INR1.4bn in 3QFY10 to INR1.8bn
in 3QFY11. The margins are expected to decline by 385 bps to 27.1% in 3QFY11
compared to 30.9% in 3QFY10. The margin decline is mainly on account of higher
contribution from low margin coal business in 3QFY11.
Net Profit after minority interest of INR120m is expected at INR401m in 3QFY11 as
compared to INR62.1m in 3QFY10. We expect EPS of INR1.7 during the quarter.
Great Offshore
Revenue is expected to decline marginally by 1.4% YoY (QoQ growth of 22.7%) from
INR2.50bn in 3QFY10 to INR2.47bn in 3QFY11.
EBIDTA is expected to decline by 4.86% YoY from INR1.24bn in 3QFY10 to INR1.18bn
in 3QFY11. The margins are expected to decline by 172bps from 49.8% in 3QFY10 to
48.07% in 3QFY11 compared to 53.5% in 2QFY11 mainly on account of higher project
expenditure.
Net Profit are expected to decline by 39.1% on YoY (QoQ increase of 22.0%) from
INR582.5m in 3QFY10 to INR354.2m in 3QFY11 translating into EPS of INR9.5.
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