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Performance expected to pick up momentum…
Essar Shipping Ports and Logistics Ltd (Essar Shipping) reported mildly
disappointing results with a 3.8% QoQ drop in topline due to the subdued
performance of the ocean transport, oilfield services and port businesses.
During the quarter, the company added 12 MTPA of capacity at Vadinar
(wet cargo) whose capacity has now increased to 58 MTPA. Along with
Hazira (30 MTPA dry cargo), the combined port capacity has increased to
88 MTPA, which will be further ramped up to 158 MTPA over the next
two years. We also expect earnings from the oilfield services business to
improve as the company is likely to deploy its semi submersible rig at
charter rates in excess of $2,50,000 per day.
�� Operating performance under pressure in Q4FY11
Essar Shipping reported a 3.8% QoQ drop in revenue at | 787.9 crore.
This was mainly on account of a drop in earnings from the ocean
transport division of the company, which declined by 14.7% QoQ from |
347.2 crore to | 302.8 crore. The oilfield services business also reported
a 16.6% QoQ decline in revenue from | 91.6 crore to | 76.4 crore as its
semi submersible rig, which is deployed in Vietnam, earned lower
charter rates. Earnings from the ports and terminal business declined by
6.4% QoQ from | 176.9 crore to | 165.6 crore. In FY11, Vadinar handled
30.05 million tonnes (MT) of cargo while Hazira handled 9.5 MT of cargo
and the average realisation was | 185 per tonne of cargo handled. The
only exception was the surface transport business, which registered a
QoQ rise of 19.6% on account of a rise in cargo handled for the Essar
group. The operating margin declined from 36.5% to 30.8% on a QoQ
basis with EBITDA of | 242.5 crore. The company reported a 48.9% QoQ
drop in PAT to | 14.0 crore in Q4FY11.
Valuation
At the CMP of | 90, the stock is trading at 16.2x FY13E EPS of | 5.6 and
0.6x FY13E book value of | 148. We have valued each division on a DCF
basis to arrive at a price target of | 95 and recommend HOLD rating.
Existing investors should also continue to HOLD the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Performance expected to pick up momentum…
Essar Shipping Ports and Logistics Ltd (Essar Shipping) reported mildly
disappointing results with a 3.8% QoQ drop in topline due to the subdued
performance of the ocean transport, oilfield services and port businesses.
During the quarter, the company added 12 MTPA of capacity at Vadinar
(wet cargo) whose capacity has now increased to 58 MTPA. Along with
Hazira (30 MTPA dry cargo), the combined port capacity has increased to
88 MTPA, which will be further ramped up to 158 MTPA over the next
two years. We also expect earnings from the oilfield services business to
improve as the company is likely to deploy its semi submersible rig at
charter rates in excess of $2,50,000 per day.
�� Operating performance under pressure in Q4FY11
Essar Shipping reported a 3.8% QoQ drop in revenue at | 787.9 crore.
This was mainly on account of a drop in earnings from the ocean
transport division of the company, which declined by 14.7% QoQ from |
347.2 crore to | 302.8 crore. The oilfield services business also reported
a 16.6% QoQ decline in revenue from | 91.6 crore to | 76.4 crore as its
semi submersible rig, which is deployed in Vietnam, earned lower
charter rates. Earnings from the ports and terminal business declined by
6.4% QoQ from | 176.9 crore to | 165.6 crore. In FY11, Vadinar handled
30.05 million tonnes (MT) of cargo while Hazira handled 9.5 MT of cargo
and the average realisation was | 185 per tonne of cargo handled. The
only exception was the surface transport business, which registered a
QoQ rise of 19.6% on account of a rise in cargo handled for the Essar
group. The operating margin declined from 36.5% to 30.8% on a QoQ
basis with EBITDA of | 242.5 crore. The company reported a 48.9% QoQ
drop in PAT to | 14.0 crore in Q4FY11.
Valuation
At the CMP of | 90, the stock is trading at 16.2x FY13E EPS of | 5.6 and
0.6x FY13E book value of | 148. We have valued each division on a DCF
basis to arrive at a price target of | 95 and recommend HOLD rating.
Existing investors should also continue to HOLD the stock
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