Other income keeps SCI afloat… • Shipping Corporation of India’s (SCI) Q2FY15 result update :: ICICI Securities, link

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Technicals: Aban Offshore, Anant Raj, Gateway Distriparks, PTC, SCI, Tata Metaliks : Business Line

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I have purchased Aban Offshore at ₹820 and wish to hold it. Kindly let me know the short-, medium- and long-term outlook.

B. Parab

Aban Offshore (₹732.6): Following a sharp fall in early July this year, the stock found support at ₹750 and bounded up. However, this up-move failed to turn into an uptrend.

After hitting resistance at around ₹800 in early August, the stock started to decline and decisively breached the key support at ₹750. This level has now turned into a key resistance level. Only a strong breakthrough of ₹750 will take the stock higher to ₹800 and then to ₹830 in the medium term. Next resistance above ₹830 is pegged at ₹940.

But a decisive fall below the stock’s immediate support at ₹700 will have an adverse effect and the stock can decline to ₹600 and then ₹550 in the medium to long term. In this scenario, exit the stock and buy at lower levels.

Subsequent supports below ₹550 are placed at ₹500 and ₹450.

I hold Anant Raj at ₹70. Shall I hold for the long term?

Biju P

Anant Raj (₹57.7): The stock of Anant Raj is in a long-term downtrend; only a strong move above ₹150 will bring in bullish momentum. But this is unlikely to happen as the stock’s significant resistance at ₹100 is limiting rallies. In early June 2014, the stock encountered a hurdle around ₹85 and began to decline. It has been on a short-term downtrend since then. However, the stock is currently testing the 200-day moving average and an important support at ₹54, which can provide a near-term breather.

A fall below this level will strengthen the downtrend and drag the stock down to ₹50 and then to ₹42 levels in the medium term. Exit the stock on rallies. Immediate resistances are at ₹65 and ₹74 levels.

Is it better to hold shares of Gateway Distripacks purchased at ₹240 or sell? Please give the technical outlook.

Ajit

Gateway Distriparks (₹255): Though the stock breached the key resistance at ₹245 in the previous week after testing it for over two months, its indicators are projecting a bleak medium-term outlook. Having stuck to the stock for many years, it is advisable that you exit the stock now and re-enter at a later stage.

The stock has important support band between ₹220 and ₹230; a decisive fall below this will pave way for a downmove to ₹180. Next support is at ₹155. Important resistances are at ₹261 and ₹270.

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Shipping Corp of India: Disappointment continues, downgrade to Sell: Centrum

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Disappointment continues, downgrade to Sell
Shipping Corporation of India’s (SCI) Q3FY12 results continued to remain weak
and was below expectations. Apart from the container liner segment which
continues to report losses, the bulk division (adjusted for profit from sale of ships)
also remained in red. The company reported losses of Rs390mn at the EBIT level
(adjusted for profit from sale of ships). We believe SCI would remain impacted by
lower freight rates and higher operating costs, which would result in operational
losses for FY12 and FY13. We have lowered our estimates and downgrade the
stock to Sell. We believe that the recent run-up in the stock is not sustainable;
especially given that the global supply glut and slower demand growth is likely to
mar the shipping industry until the end of 2013.
􀂁 Q3 results below expectations: Revenue grew 29.1% YoY to Rs11,475mn, 13.5%
above our estimate mainly on the back of foreign exchange gain of Rs1,686mn
included in other operating income. EBITDA plunged 26.8% YoY to Rs1,180mn
while margins declined 785pp YoY to 10.3%. Operating expenses (including
bunker costs) at 69.2% of revenue increased 14.5pp YoY and 265bp higher than
anticipated. Bunker cost at 42.2% of revenue increased 18.5pp YoY and 145bp
QoQ to Rs4,082mn.
􀂁 Operational losses across segments: Though SCI reported EBIT profits in its
bulk division at Rs1,377mn in Q3 these were not the operating profits at it
included Rs1,751mn profit from the sale of eight old vessels. The container
liner segment continued its losses at Rs241mn. This led to overall operational
(EBIT) loss of Rs390mn vs. a profit of Rs600mn last year.

Sell Shipping Corporation of India (SCI) ; Target : Rs 57 ::ICICI Securities, pdf link

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http://content.icicidirect.com/mailimages/ICICIdirect%20ShippingCorporation_Q3FY12.pdf


E x t r a o r d i n a r y   i n c o  m e   b o o s t s   p r o f i t a b i l i t y…
Shipping Corporation (SCI) reported a profit after three consecutive
quarters of losses, albeit due to an extraordinary income of | 175.2 crore.
Revenues for Q3FY12 grew by 12% to 1147.5 crore (I-direct estimate:
| 1013.4 crore). EBITDA declined by 26% YoY but registered a QoQ rise
of 20% to | 118 crore. The EBITDA margin stood at 10.3% compared to
18.1% and 9.6% in Q3FY11 and  Q2FY12, respectively. Though
depreciation was higher by 8% QoQ at | 158 crore, lower interest
expense (down 29% QoQ at | 102.8 crore) and an extraordinary profit on
sale of vessels (| 175.2 crore) enabled SCI to report a net profit of | 74.1
crore. Over the last two years, SCI’s operating performance has been
burdened owing to bunker cost to  sales ratio increasing from 22% in
Q1FY11 to 42% in Q3FY12. We expect the pressure on the operating
margin to continue, going ahead,  which would lead to the company
reporting losses in FY12 and FY13.
ƒ Segmental performance and fleet status
Both major segments in which SCI operates i.e. bulk and container were
under pressure during Q3FY12. The container segment reported an EBIT
loss of | 24 crore while the bulk segment reported a profit of | 137.7 crore
only on the back of other operating income of | 180 crore (of which | 169
crore is exchange gain). The offshore segment reported an EBIT of | 23
crore in Q3FY12 against | 18 crore in Q2FY12. SCI currently owns a fleet
of 77 vessels, which is expected to be increased to 100 by FY13 through
phased induction of new vessels. Though SCI will be able to report a
growth in revenues, lower EBITDA margin, higher interest and
depreciation costs are expected to curtail the profitability.
V a l u a t i o n
We expect the pressure on the operating margin to continue owing to a
weak freight scenario. Also, higher interest and depreciation cost would
negatively impact SCI’s profitability, going ahead. At the CMP of | 77, the
stock is trading at 0.54x FY13E book value of | 143. We have valued the
stock at 0.4x FY13E book value to arrive at a price target of | 57 and
recommend a SELL rating. Existing investors can exit the stock.

PDF link - Hindustan Dorr Oliver, Voltamp Transformers, SCI :::Kotak Sec,

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http://www.kotaksecurities.com/pdf/dmb/MorningInsight16022012.pdf



HINDUSTAN DORR-OLIVER LTD (HDO)
RECOMMENDATION: REDUCE
TARGET  PRICE:  RS.35
FY13E P/E: 11.1X


VOLTAMP LTD
 RECOMMENDATION: REDUCE
TARGET  PRICE:  RS.519
FY13E P/E: 11.8X


SHIPPING CORPORATION OF  INDIA
RECOMMENDATION: SELL
TARGET  PRICE:  RS.60
FY13E P/E: 58.5X

PDF link - SCI, Simplex Infrastructures, IVRCL:: Kotak Sec,

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http://www.kotaksecurities.com/pdf/dmb/MorningInsight16022012.pdf



SHIPPING CORPORATION OF  INDIA
RECOMMENDATION: SELL
TARGET  PRICE:  RS.60
FY13E P/E: 58.5X


SIMPLEX  INFRASTRUCTURES
RECOMMENDATION: ACCUMULATE
TARGET  PRICE:  RS.230
FY13E P/E: 7.6X


IVRCL INFRASTRUCTURE LTD
RECOMMENDATION: ACCUMULATE
TARGET  PRICE:  RS.61
FY13E P/E: 15.9X

SCI, Shipping Corp of India Hold Target Price: Rs60:: Centrum,

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Shipping Corp of India

Hold

Target Price: Rs60

CMP: Rs62             

Downside: 3%

Slower capex on dismal macro outlook

Shipping Corporation of India (SCI) is slowing down its expansion and diversification plans on the back of expectations of continued dismal macro outlook. The company expects supply pressures in the global markets to continue to keep freight rates under pressure. It wants to slow down on its expansion plans as well as its diversification into allied activities like shipbuilding due to the challenging business environment. SCI has 26 vessels on order, while it plans to scrap at least 15 ageing ships during FY12. The adverse market scenario has impacted SCI with net losses of Rs1,465mn during H1FY12 vs. a net profit of Rs4,421mn in H1FY11. We believe SCI would remain impacted by lower freight rates and higher operating costs. We continue to have a cautious outlook on SCI with a Hold rating and a target price of Rs60.

m  Macro headwinds impact profitability: SCI has reported net loss for the last three consecutive quarters impacted by the slowdown in the sector and lower freight rates. Its net loss increased to Rs1406mn in Q2FY12 from Rs59mn in Q1 and Rs62mn in Q4FY11. It reported losses of Rs235mn at the EBIT level in Q3FY12 vs. a profit of Rs2.4bn last year.

m  Slower capex to conserve cash: SCI had set up an aggressive capex plan of Rs131bn to add 60 vessels under the 11th Five-Year Plan (2007-12). The company was able to place orders for 32 new ships, though at the peak of the shipping cycle of FY08-09 worth Rs81bn. However, it has put on hold its earlier plan to place the second round of orders for the remaining capacity during FY11-12 as it believes that the macro environment is not conducive to increase capacity as the global shipping industry is already reeling due to over capacity. SCI added 6 vessels during H1FY12 and has another 26 under construction from orders already placed.

m  Sale of older vessels to help improve profitability: SCI plans to scrap at least 15 older and ageing vessels during FY12 to help improve profits. It earned Rs324mn from the sale of two ships during H1FY12. SCI has already scrapped seven of them till date during this fiscal and of this 5 in the last two months i.e. during Q3FY12. These vessels are reaching their asset life of 25 years and are not viable to operate. While operating costs are high including higher repairs & maintenance, they have lower demand leading to lower freight rates.

m  Outlook cautious, maintain Hold: We believe SCI would remain impacted by lower freight rates and higher operating costs, which would result in operational losses. We expect SCI to report a net loss of Rs1.5bn in FY12 (aided by profit from sale of ships) and a marginal profit of Rs562mn in FY13. We continue to have a cautious outlook on SCI with a Hold rating. We have valued the stock at 0.4x FY13 P/B and set our target price of Rs60. However, we believe that there is limited downside as the stock is trading at its historical low valuations.

Shipping Corp India- Sell TARGET PRICE: RS.60 :: Kotak Sec

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SHIPPING CORPORATION OF INDIA
PRICE: RS.67 RECOMMENDATION: SELL
TARGET PRICE: RS.60 FY13E P/E: 27.5X
Subdued operational performance - company reports net loss in
the quarter
Subdued shipping market, higher bunker cost, higher interest payment and
higher depreciation has resulted in SCI reporting net loss in the quarter of
Rs 1408 mn (versus expectation of profit of Rs 120 mn). This is third
consecutive quarter for SCI reporting net loss. Poor performance was
reported by the bulk segment and liner segment which has reported loss of
Rs 437 mn and Rs 16 mn respectively at EBIT level in the quarter. Even the
tanker segment continues to be weak. Over supply of ships continues to put
pressure on the freight rates affecting the performance of most of the shipowners
including SCI. Company now has curtailed its capex programme
over the next two years due to poor shipping market outlook and also to
conserve cash. We are very cautious on the business of the company and
estimate that the NAV of the company has eroded significantly over the last
4 months. We change our rating on the company to SELL from current rating
of REDUCE with a new PT of Rs 60 for the stock. The company intends
diversifying into shipbuilding and deep water offshore business which we
believe would take atleast 3 to 4 years from today and would help SCI to
beat the cyclicality of shipping business.

Outlook remains negative for IFCI, Shipping Corporation:: Business Line

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IFCI: The long-term as well as short-term outlook remains negative for IFCI as the stock breached its all-important support level.

The stock now finds resistance at Rs 24 and support at Rs 17.

If the bearish trend sustains, the possibility of the stock touching the support level is not ruled out.

In the short-term, the stock could see a narrow movement between Rs 20 and Rs 24.

F&O pointers: The counter accumulated fresh short positions. This is one of the counters that witnessed heavy rollovers, particularly on the short side.

The rollover was 91 per cent to the December series. Low cost of carry indicates trader unwillingness to carry over the position. At the same time, higher annualised volatility signals caution.

Strategy: Traders can consider bear put spread or short strangle. We recommend short strangle for IFCI. This can be initiated by selling 25 call and 20 put that closed at Rs 0.85 and Rs 0.65 respectively.

While the maximum profit in the strategy is the premium collected, the loss could be unlimited if IFCI swings wildly in single direction. Besides writing (selling) options involves high margin commitments. The maximum profit will occur if IFCI settles between Rs 25 and Rs 20 on the expiry day. The market lot is 4,000 shares. This strategy is for high-risk appetite traders only.

Shipping Corporation: The long-term as well as medium-term outlook remains negative for the stock, as it closed below an important support level.

Only a close above Rs 117 would change the outlook to positive for the stock.

Shipping Corporation now finds an immediate resistance at Rs 72 and support at Rs 49. It now appears the stock is heading towards its support level. It finds its next support at Rs 36.

F&O pointers: The Shipping Corporation December futures did not see much accumulation.

Rollover of open position from November to December stood at 87.5 per cent, which is slightly lower than the three-month average. Rollovers with fall in share price indicate negative bias for the stock. Options are not active.

Strategy: Traders can consider going short on Shipping Corporation.

The stop-loss can be placed at Rs 62.5 for an initial target of Rs 49. Investors with long-term perspective can keep the stop-loss at Rs 72.

Follow-up: We had recommended a long on Siemens, but the recommendation turned negative, as the stock hit its stop loss.

However, recommendation of writing 2,200 call provided profit opportunities.

Hold Shipping Corporation of India (SCI) Target : Rs 59 ::ICICI Securities

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D i sm  a l   o p e r a t i n g   p e r f o r m a n c e…
Shipping Corporation (SCI) reported a loss for the third consecutive
quarter. Though revenues for Q2FY12 grew by 4.6% to 1017.4 crore (Idirect estimate of | 900.6 crore), EBITDA declined by 17% to | 98.1 crore
due to a QoQ dip of 250 bps in EBITDA margin to 9.6%. Higher interest
cost further aggravated the situation and SCI reported a net loss of |
140.6 crore for the quarter. SCI’s revenues have increased due to dual
impact of induction of new vessels  and exchange rate variation. The
EBITDA margin declined mainly on account of an increase of bunker cost
to sales ratio by 507 bps on a QoQ basis to 38%. SCI’s profitability has
been further negatively impacted by a five-fold increase in interest cost to
| 146 crore (of which | 126 crore is due to the impact of exchange rate
variation, which is notional in nature). We expect SCI’s profitability to
remain under stress despite an increase in revenues in FY12 and FY13.
ƒ All segments under pressure
All the segments in which SCI operates i.e. bulk, container and offshore
were under pressure during Q2FY12. Bulk and container segments
reported EBIT losses of | 44 crore and | 1.6 crore, whereas even the
offshore segment EBIT was down by 57% to | 18 crore. SCI currently
owns a fleet of 81 vessels, which is expected to be increased to 90 by
FY12 and 100 by FY13 through phased induction of new vessels. Though
SCI will be able to report a growth in revenues, higher interest and
depreciation costs are expected to curtail the profitability. The expansion
of the fleet undertaken by SCI does not bode well for the company in the
current weak freight rates scenario, which would make  the breakeven of
vessels take longer as these assets were ordered during 2007-08 during
the peak freight rate cycle at significantly higher prices.
V a l u a t i o n
At the CMP of | 63, the stock is trading at 0.42x FY13E book value of |
149. We have valued the  stock at 0.4x FY13E book value to arrive at a
price target of | 59 and recommend a HOLD rating. Existing investors can
exit the stock at any upsides in stock price.

Reduce SHIPPING CORPORATION OF INDIA (SCI) Target: Rs.86 ::Kotak Sec,

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SHIPPING CORPORATION OF INDIA (SCI)
PRICE: RS.73 RECOMMENDATION: REDUCE
TARGET PRICE: RS.86 FY12E P/E: 15.6X
We interacted with the management of SCI to get an insight on the latest
developments in the shipping market and the company. We also factor in
FY11 annual report in our analysis.
The tanker market in which SCI primarily operates has fallen by ~25% YoY
in the last six months, more than what we had anticipated. The outlook also
continues to remain weak for medium term with both OPEC and IEA
bringing down the oil demand forecast for CY11 and CY12. Amidst weak
shipping market, SCI has either deferred or cancelled a part of its capex
programme. Consequently we have brought down our earnings estimate for
FY12E and FY13E and reduce our target price to Rs 86 per share (from Rs 110
per share).
Company has brought down its capex programme - a prudent
measure
In the beginning of FY12, SCI was having a capex programme of Rs 78 bn over FY12
to FY14E, with deliveries of ships happening in FY14 and FY15. But with the continued
weakness in the shipping market, the company has either curtailed or deferred
a part of its capex in the commercial segment in the last 3 months. We now estimate
the company to spend about Rs 47 bn (approx. ~ 40% less of earlier plan)
over FY12E to FY14E as capex on 30 ships (earlier 40 ships).
With shipping markets continuing to go through a bad phase and expected to remain
subdued atleast for the next two years, we believe SCI has taken a prudent
measure in curtailing its capex. Similarly other Indian companies like GE Shipping
and Mercator Lines Ltd (MLL) are also going slow with their capex program in the
shipping segment.


Capex would have highly leveraged the balance sheet for SCI
Though SCI did an FPO in FY11 of Rs 6.5 bn to buy assets, it would have primarily
resorted to high cost debt to pursue its huge capex programme which would have
leveraged the balance sheet and evaporated the cash reserve. With debt becoming
expensive and shipping market going through a bad phase, it would have been difficult
for the company to service its debt, do further capex and generate free cash
flow. With the above prudent step SCI has kept its financial position much
favourable.


Company currently has cash balance of Rs 17 bn - Secured loans
of the company has almost doubled in pursuing its capex program.
SCI did a capex of ~Rs 30 bn in FY11 through a mix of debt and equity. As a result
the gross debt of the company has gone up from ~Rs 26 bn in FY10 to ~ Rs 47 bn
in FY11. Gross debt of the company currently stands at ~Rs 52 bn with cash balance
of Rs 17 bn (which is ~12% of the capital deployed). Healthy cash balance is of
utmost importance for the company to make timely asset purchase and face the
cyclicality of shipping business. Healthy cash balance could positively impact the
other income component of the company with interest rates peaking and expected
to move up further.
Tough phase for shipping business continues - Supply side pressure
continues
In the dry market, the BDI still struggles to surpass the 1,500 points level mark with
weak expectations for the forthcoming days. Even the tanker market is very soft
with oversupply of ships and minimum tonnage available. We believe the current
spot market rates across most of the shipping segments are below the operational
cost of the ship. We are not bullish on the shipping business going forward primarily
due to oversupply of ships in the bulk segment (net supply of 7.0% per annum) and
even in the tanker segment (net supply of 3.2% per annum) over CY11E to CY14E
We estimate the net NAV at Rs 123 per share
The management indicated that the NAV for the company has fallen to Rs 133 per
share in the June quarter (it was Rs 145 per share as on March 2011). The three key
segments - dry, tanker and container market has fallen about 5% to 50 % YoY in
the quarter, the NAV for SCI has also fallen QoQ. We now estimate the net NAV of
the company at Rs 123 per share. Usually the shipping asset prices moves after a lag
of 2 to 3 months to shipping freight rates. We feel NAV of the company to remain
under pressure in subsequent quarters.
SCI has also shelved plans to buy a minority stake in a shipbuilding
company. It also postpones it plans to enter the high end offshore
market
SCI was doing due diligence of some of the shipyards including ABG, Bharati and
Pipavav for buying a small stake of ~10%. Company cited this step as an intitiative
towards backward integration. We estimate this purchase by SCI not to materialise
in near term (only after FY13E) and hence we don't factor this in our numbers.
Company also intends to get into high end off shore market like jack up, drill ships
and submersible. With oil above $ 100 per barrel, we believe the market for deep
water drilling is very lucrative. GE Shipping through its 100% subsidiary - Great India
Ltd - is already having significant presence in this area. As the segment is very capital
intensive, SCI has deferred its plans to enter this segment for now. Company also
intends to hive off the offshore segment into a separate 100% subsidiary which is
expected by end of FY13E.


Top line and earnings to remain under pressure
Subdued shipping market, higher bunker cost and higher depreciation has resulted
in SCI reporting loss for two subsequent quarters including Q4FY11 and Q1FY12. All
the three key segments of shipping including container, bulk and the tanker segment
have performed badly and performance is estimated to be weak in medium
term. Over supply of ships continues to put pressure on the freight rates affecting the
performance of most of the ship-owners including SCI. We estimate the revenues
and earnings of the company to remain under pressure in near term.


Valuation and Recommendation
We have reduced the target price of SCI to Rs 86/share (earlier Rs 110) to reflect
weakness in the shipping business (especially tanker segment) and the subsequent
fall in asset prices across segments by 5 to 50% over the last six months.
Historically most Indian Shipping companies including SCI have traded in a range of
0.6 x to 0.9 x of its NAV. We value SCI at 0.7 x NAV, in line with our view that the
shipping sector would remain under pressure at least till CY12. We reiterate Reduce
rating on SCI with a changed price target of Rs 86.
We also factor in the following while arriving at the fair value and Reduce rating:
1. Asset prices would continue to remain under pressure
2. Poor return ratios - ROE and ROCE are <10%, both in FY12E and FY13E.
3. Negative free cash flow for the company over FY11 - FY13E

Sizzling Stocks - Jubilant FoodWorks. Shipping Corporation of India ::Business Line,

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Sizzling Stocks - Jubilant FoodWorks (Rs 704.9)

The stock nosedived 20 per cent to record an intra-week low of Rs 633 in the previous week. However, after testing the key support at around Rs 650, the stock bounced up 7 per cent on Friday which trimmed its weekly loses to 11 per cent. The stock has been on a medium-term downtrend ever since peaking out from its life time high of Rs 1,021 recorded on September 6. As long as the stock trades below the significant medium-term resistance at Rs 850, its medium-term trend remains down.

The stock's recent rebound can encounter resistances at Rs 735, Rs 762 and at Rs 790. But inability to surpass Rs 762 will pull the stock down to Rs 650 in the short-term. Conclusive breach of the key support level of Rs 650 will strengthen the stock's medium-term downtrend and drag it down to Rs 550 and then to Rs 490-500 range in the upcoming months.

Shipping Corporation of India (Rs 68.9)

Shipping Corporation of India plummeted 17 per cent, breaking through a key long-term support at Rs 80 and landed at its next key support band at Rs 67 and Rs 70. There has been an increase in volumes over the past four trading sessions. The stock's daily and weekly indicators are featuring in the oversold regions. A reversal from its key support band at Rs 67 and Rs 70 will lift the stock higher to Rs 75 and then to Rs 80 in the short-term. Resistances above Rs 80 are at Rs 85 and Rs 88.

The stock's intermediate-term trend is down from its October 2010 peak of Rs 202. Strong move above Rs 120 is required to turn this trend positive. The next important support is at Rs 60.

Hold Shipping Corporation of India; Target : Rs 80 ::ICICI Securities

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P r o f i t a b i l i t y   t o   r ema i n  mu t e d…
Shipping Corporation of India (SCI)  reported a net loss for the second
consecutive quarter. After posting a loss of | 6.2 crore in Q4FY11, SCI has
reported a net loss of | 5.8 crore in Q1FY12 primarily on account of the
liner division reporting a loss. SCI’s topline has improved by 12% QoQ to
| 972 crore against our expectation of | 839 crore on account of a better
performance by the bulk segment. Revenues from the bulk segment grew
by 20% QoQ to | 666.5 crore. Though SCI’s EBITDA margin increased by
50  bps  enabling  an  EBITDA  growth  of  17%,  higher  interest  (up  by  19%)
and depreciation (up by 8%) resulted in the company reporting a net loss
of | 5.8 crore. We expect return ratios to be in the low single digits over
the next couple of years due to weakness in freight rates and continued
underperformance of the liner division. In such a scenario, a revival in
performance is likely to take a significantly longer time.
ƒ Liner division loss dents performance
SCI reported a 12.4% QoQ increase in topline in Q1FY12 to | 972 crore
due to higher fleet utilisation. The  company reported an increase in
EBITDA from | 100.7 crore in Q4FY11 to | 118.1 crore in Q1FY12 along
with improvement in EBITDA margin to 12.1%. It reported a net loss of |
5.8 crore in Q1FY12 that also included extraordinary gains of | 12.3 crore
on account of profit on sale of ship. The liner division once again slipped
deeper into the red as it posted a net loss of | 61.4 crore in Q1FY12
compared to | 18.3 crore in Q4FY11. The liner division reported a topline
of | 273.5 crore that was ~28% of the total revenue of the company.
V a l u a t i o n
At the CMP of | 82, the stock is trading at 17.5x FY13E EPS of | 4.7 and
0.52x FY13E book value of | 158. We have valued the stock at 0.5x FY13E
book value to arrive at a price target of | 80 and recommend a  HOLD
rating. Existing investors are advised to exit the stock.

Shipping Corporation of India; Hold Target : RS 97- ICICI Securities,

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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.

Query Corner: ITC poised at fresh life-time high :Business Line,

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Please throw some light on Shipping Corporation of India and ITC for one-year horizon.

Vivek and JP

Shipping Corporation of India (Rs 110.8): In our review of this stock in January we had emphasised that the structural trend was up in Shipping Corporation of India. We had also indicated that the zone between Rs 200 to Rs 220 could be hard to surpass. We had then given the downward targets at Rs 95 and Rs 70.

The stock recorded the trough of Rs 98 in February and is currently attempting to move higher. Medium-term resistances are at Rs 138 and Rs 162. Investors with short- to medium-term horizon should exit on failure to move beyond the first resistance. The stock will then move lower to Rs 90 or even lower in the upcoming months.

Long-term view will turn positive only on a move beyond Rs 162 with the next target at the long-term resistance zone mentioned above.

ITC (Rs 191.9): The long-term uptrend from October 2008 ended at the peak of Rs 184 in October last year. But the correction that followed resulted in the stock retracing 30 per cent of its prior up-move, and the long-term uptrend appears to have resumed from the February low of Rs 150.

The stock is currently poised at a new life-time high. Corrections over the medium-term could halt at either Rs 178 or Rs 168. Investors with medium-term horizon can hold the stock with stop at Rs 165. Long-term investors can hold with deeper stop at Rs 145.

If ITC halts the correction above Rs 165, it can move on to Rs 220 over the upcoming months. However, weekly close below Rs 145 will mar the long-term view, paving the way for a decline to Rs 135 or Rs 122.

What is the immediate prospect of Rural Electrification Corporation (REC) and IDBI under technical lens?

Krupa

REC (Rs 238.7): In our review of REC in February this year, we had given the medium-term trend deciding level at Rs 190. The stock bottomed at Rs 216 in March, and it is currently trying to hold above this level. Key short-term resistance is at Rs 292. Failure to move above this level in the ensuing weeks can result in the stock declining to Rs 205 or Rs 190 over the medium-term.

Short-term view will turn positive only on a rally above Rs 292 paving the way for a subsequent up-move to Rs 314 or Rs 336.

Long-term view will turn positive on a close above Rs 336, which will in turn confirm that the stock is headed towards its previous life-time high of Rs 409.

IDBI Bank (Rs 143.5): When we had looked at the prospects of this stock in November last year, we had written that the entire up-move from March 2009 to November 2010 could be correcting, and that minimum downward targets for the move were Rs 153 and Rs 140. The stock declined slightly below these targets to bottom at Rs 123 in February.

Key medium-term supports based on Fibonacci retracement levels are at Rs 118 and Rs 100. The current nascent uptrend will face resistance at Rs 155 and Rs 173. Failure to move beyond the first resistance will imply a propensity to decline over the upcoming months. Conversely, move above Rs 173 can take the stock to Rs 225 in the medium-term.

At what levels should I buy Asian Hotels?

Geetika

Asian Hotels (Rs 223): This stock formed a long-term trough at Rs 191 in March 2009. After a heady rally to Rs 700 by April 2010, Asian Hotels is once more testing this support. Investors can buy the stock at current levels with stop at Rs 180.

There is strong support in the band between Rs 190 and Rs 200. But it needs to be borne in mind that penetration of this support band can cause a sharp decline in price to Rs 150 or even Rs 95.

Medium-term targets for the stock are at Rs 354 and Rs 445. Investors can divest their holding on a failure to cross the first resistance.

Please discuss the technical outlook of Allied Digital Services.

Jatin shah

Allied Digital Services (Rs 90.9): The carnage in stock markets in 2008 dragged Allied Digital Services to the low of Rs 73 by March 2009. The subsequent recovery could not take the stock past the resistance at Rs 260 and the stock is once more testing its long-term support around Rs 70. Investors holding the stock can continue to do so with the stop-loss at Rs 65. It is hard to state where the rot will be stemmed once the stock begins sliding below Rs 70.

The stock will face resistances at Rs 150 and Rs 196 in the months ahead. Investors with short- to medium-term perspective can divest their holdings on a sharp reversal from either of these levels.

Please explain the long-term prospects of City Union Bank.

Rohit

City Union Bank (Rs 43.7): Long-term trend in City Union Bank is up since March 2009. That the stock was able to surpass its January 2008 peak of Rs 43 in this run also bodes well for the stock. It is however in a medium-term correction since last December. This down-move will get support at Rs 36, Rs 31 and Rs 26.

The stock is currently halting above the first support. If it continues to hold above this level, it can move higher to Rs 62 or Rs 80 over the next couple of years.

Sideways movement in a broad range between Rs 36 and Rs 54 is, however, possible for a few more months before the stock breaks above the resistance zone around Rs 54.

In the technical analysis, it is said that when a scrip is moving up, it makes higher top and higher bottom. In this regard, please tell me how to conclude that that scrip has made a bottom.

Ghanshyam

The opposite is true when the stock is trending lower. It makes lower peaks and lower bottoms. When the sequence of lower peaks and lower troughs reverses and the stock starts recording higher peaks and higher troughs, it can be concluded that the stock has bottomed.

One way of ensuring this is with the aid of trendline. In a down-move, trendline is drawn by connecting the peaks.

When the stock price closes strongly above the downward sloping line, a bottom can be ensured. Similar break-outs above short-term moving average lines are also useful in this regard.

I have bought Edserv Softsystems at Rs 152. Please advise on its future prospects.

K.S.Suryanarayanan

Edserv Softsystems (Rs 148.9): Edserv Softsystems is advised only for investors with high risk appetite. The stock moved up from one circuit to another between July and October 2009, racing from Rs 34 to Rs 257 in this period.

The stock is, however, in a protracted corrective phase since January last year. Key support for this correction is at Rs 130. The stock bounced off this support in February and again in March.

Decline below this level can drag the stock all the way down to Rs 50. Medium-term resistances are at Rs 182 and Rs 230.

Shipping:: Q4FY11 Preview: Valuations at attractive levels:: CENTRUM

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Valuations at attractive levels
Oversupply and lower demand in the shipping industry
globally, continued to lead the decline in freight rates
during Q4FY11. This was more visible in the dry bulk
commodities which continue to remain under pressure
due to high fleet supply expected during 2011. While
the Baltic Dry Index (DBI) was down 48.2% YoY to 1,545
at the end of Q4, Baltic tanker index was down just 3.9%
YoY to close Q4 at 936. We maintain our positive view
on tanker-based Indian shipping operators with a Buy
on Great Eastern Shipping (GE Shipping) and Shipping
Corp of India (SCI).
􀂁 Freight rates to remain under pressure in 2011: We
expect shipping freight rates to remain under pressure
along with supply overhang during 2011. The shipping
cycle is expected to recover post FY13, when the excess
supply is absorbed. However, dry-bulk freight rates are
likely to remain subdued with a negative bias, while
tanker freight rates are expected to remain stable at
current levels.

Add Shipping Corporation of India - Fairly priced…Target :124 ::ICICI Securities

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Shipping Corporation of India - Fairly priced…
Shipping Corporation of India (SCI) reported subdued results in Q3FY11
with its liner as well as bulk division both underperforming. The liner
division reported a dip in profits after a couple of good quarters while
higher tanker rates in Q3FY11 helped the company to stem the decline
to an extent. High bunker costs due to a rise in crude oil prices led to a
significant decline in EBITDA, which was the lowest in the last four
quarters. The stock has corrected significantly and is trading below its
FPO price of | 140 and also below its FY12 book value of | 166. It
appears fairly priced at current price levels.

Just Out: Shipping Corp of India Allotment details and Allocation ratios

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 Shipping Corp of India Allotment Is OUT. 

Details should be available in drop down menu (next to Company)

Shipping Corp of India Allotment details and Allocation ratios

** Contacts Suggest Everyone who applied for Rs 50K or more has got shares 

(at least 1 Lot of 50 shares); There is some lottery for lower order -investors with less than Rs 50K applications**

Lots Applied For	Shares Applied For	Amount Applied for	Shares Recieved	Amount Deducted	Ratio of Allotment	Probability of getting Share
1	50	7,000	50	6,650	Allocated by lottery Will post allocation ratio soon
2	100	14,000	50	6,650
3	150	21,000	50	6,650
4	200	28,000	50	6,650
5	250	35,000	50	6,650
6	300	42,000	50	6,650
7	350	49,000	56	7,448	Firm	100%
8	400	56,000	64	8,512	Firm	100%
9	450	63,000	72	9,576	Firm	100%
10	500	70,000	80	10,640	Firm	100%
11	550	77,000	88	11,704	Firm	100%
12	600	84,000	96	12,768	Firm	100%
13	650	91,000	104	13,832	Firm	100%
14	700	98,000	112	14,896	Firm	100%
15	750	105,000	120	15,960	Firm	100%
16	800	112,000	128	17,024	Firm	100%
17	850	119,000	136	18,088	Firm	100%
18	900	126,000	144	19,152	Firm	100%
19	950	133,000	152	20,216	Firm	100%
20	1000	140,000	160	21,280	Firm	100%
21	1050	147,000	168	22,344	Firm	100%
22	1100	154,000	176	23,408	Firm	100%
23	1150	161,000	184	24,472	Firm	100%
24	1200	168,000	192	25,536	Firm	100%
25	1250	175,000	200	26,600	Firm	100%
26	1300	182,000	208	27,664	Firm	100%
27	1350	189,000	216	28,728	Firm	100%
28	1400	196,000	224	29,792	Firm	100%