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P e r f o rm a n c e e x p e c t e d t o b e u n d e r p r e s s u r e…
Shipping Corporation of India (SCI) reported a net loss of | 6.2 crore in
Q4FY11 as weakness in tanker freight rates and rise in bunker costs
exerted pressure on EBITDA margins. The liner division of the company
slipped into the red leading to overall underperformance. We expect
return ratios to be in low single digits over the next couple of years due to
weakness in freight rates. In such a scenario, a revival in performance is
likely to take a significantly longer time.
ƒ Disappointing performance as operating costs rise sharply
SCI reported a 2.7% QoQ drop in topline in Q4FY11 to | 865.1 crore on
account of weakness in tanker freight rates. The company reported a
drop in EBITDA from | 161.2 crore in Q3FY11 to | 100.7 crore in Q4FY11
along with a sharp contraction in EBITDA margin to 11.6%. This was on
account of a significant rise in direct operating expenses, which was a
result of higher bunker costs due to a rise in crude oil prices. SCI
reported a net loss of | 6.2 crore in Q4FY11 that also included
extraordinary gains of | 6.9 crore. The liner division once again slipped
into the red as it posted a net loss of | 18.3 crore in Q4FY11 as against a
net profit of | 9.6 in Q3FY11. The liner division reported a topline of |
277.9 crore that was ~32% of the total revenue of the company. The
company declared a final dividend of | 2.5 per share in addition to the
earlier interim dividend of | 3.0 per share.
V a l u a t i o n
At the CMP of | 106, the stock is trading at 17.9x FY13E EPS of | 5.9 and
0.66x FY13E book value of | 161. We have valued the stock at 0.6x FY13E
book value to arrive at a price target of | 97 and recommend HOLD rating.
Existing investors are advised to exit the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
P e r f o rm a n c e e x p e c t e d t o b e u n d e r p r e s s u r e…
Shipping Corporation of India (SCI) reported a net loss of | 6.2 crore in
Q4FY11 as weakness in tanker freight rates and rise in bunker costs
exerted pressure on EBITDA margins. The liner division of the company
slipped into the red leading to overall underperformance. We expect
return ratios to be in low single digits over the next couple of years due to
weakness in freight rates. In such a scenario, a revival in performance is
likely to take a significantly longer time.
ƒ Disappointing performance as operating costs rise sharply
SCI reported a 2.7% QoQ drop in topline in Q4FY11 to | 865.1 crore on
account of weakness in tanker freight rates. The company reported a
drop in EBITDA from | 161.2 crore in Q3FY11 to | 100.7 crore in Q4FY11
along with a sharp contraction in EBITDA margin to 11.6%. This was on
account of a significant rise in direct operating expenses, which was a
result of higher bunker costs due to a rise in crude oil prices. SCI
reported a net loss of | 6.2 crore in Q4FY11 that also included
extraordinary gains of | 6.9 crore. The liner division once again slipped
into the red as it posted a net loss of | 18.3 crore in Q4FY11 as against a
net profit of | 9.6 in Q3FY11. The liner division reported a topline of |
277.9 crore that was ~32% of the total revenue of the company. The
company declared a final dividend of | 2.5 per share in addition to the
earlier interim dividend of | 3.0 per share.
V a l u a t i o n
At the CMP of | 106, the stock is trading at 17.9x FY13E EPS of | 5.9 and
0.66x FY13E book value of | 161. We have valued the stock at 0.6x FY13E
book value to arrive at a price target of | 97 and recommend HOLD rating.
Existing investors are advised to exit the stock.
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