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Operating performance in‐line: Bharati Shipyard’s (BHSL’s) operating
performance was in line with expectations, with revenues at Rs3,477m, growing
10% YoY and 5% QoQ. On account of a limited order book, despite expanded
capacities, yard utilizations have remained under pressure. Operating margins
stood steady at 18.2% for the quarter. Subsidy booking during the quarter to the
tune of Rs 745m led the company to report PAT at Rs 173m. However the
company continues to report a loss excluding subsidy. For Q1 FY12 the company
reported a loss to the tune of Rs 349m excluding subsidy.
Balance sheet stretched: The debt on the company’s books currently stands at
~Rs35bn translating into a debt: equity ratio of 3.5:1. Interest expenses continue
to rise showing a sequential jump of 14% to Rs 1,056m for the quarter. Debt
continues to pose a big challenge to the company in this scenario of low future
revenue visibility.
Order book scenario: BHSL’s unexecuted order book stands at Rs6.44bn, giving
us a visibility of two quarters. The management has been guiding for inquiries to
translate into orders for the last few quarters but no new orders have fructified.
Valuations: On account of a continued decline in order book and lack of clarity
of future order flows, we expect the next few quarters to witness some turmoil.
Our future projections are based on the execution of the current order book,
certain contract revenues as well expectation of some orders being received
towards the end of FY12. In the case of quantum of orders exceeding
expectations or in an earlier timeframe, we will revise our estimates upwards, as
the company has capacities in place to execute the same. We rate the stock
‘Accumulate’, with a target price of Rs125.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Operating performance in‐line: Bharati Shipyard’s (BHSL’s) operating
performance was in line with expectations, with revenues at Rs3,477m, growing
10% YoY and 5% QoQ. On account of a limited order book, despite expanded
capacities, yard utilizations have remained under pressure. Operating margins
stood steady at 18.2% for the quarter. Subsidy booking during the quarter to the
tune of Rs 745m led the company to report PAT at Rs 173m. However the
company continues to report a loss excluding subsidy. For Q1 FY12 the company
reported a loss to the tune of Rs 349m excluding subsidy.
Balance sheet stretched: The debt on the company’s books currently stands at
~Rs35bn translating into a debt: equity ratio of 3.5:1. Interest expenses continue
to rise showing a sequential jump of 14% to Rs 1,056m for the quarter. Debt
continues to pose a big challenge to the company in this scenario of low future
revenue visibility.
Order book scenario: BHSL’s unexecuted order book stands at Rs6.44bn, giving
us a visibility of two quarters. The management has been guiding for inquiries to
translate into orders for the last few quarters but no new orders have fructified.
Valuations: On account of a continued decline in order book and lack of clarity
of future order flows, we expect the next few quarters to witness some turmoil.
Our future projections are based on the execution of the current order book,
certain contract revenues as well expectation of some orders being received
towards the end of FY12. In the case of quantum of orders exceeding
expectations or in an earlier timeframe, we will revise our estimates upwards, as
the company has capacities in place to execute the same. We rate the stock
‘Accumulate’, with a target price of Rs125.
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