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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.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
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.
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