Target Period : 12 months Doomsday in offshore; tankers...

May 9, 2016

ICICI Securities Ltd | Retail Equity Research

Result Update

Doomsday in offshore; tankers continue support • Gesco’s results for Q4FY16 were significantly lower than our

estimates. Revenues remained flattish YoY (down 8% QoQ) to | 877 crore (I-direct estimate: | 990 crore). Revenue for the quarter was adversely impacted by lower offshore revenues that were flat YoY (down 9% QoQ) to | 418 crore. Shipping revenues grew 13% YoY (up 3% QoQ) to | 552 crore. Revenue days for shipping and offshore segment were at 2659 days and 1918, respectively

• EBITDA for the quarter grew 20% YoY (down 17% QoQ) to | 424 crore (I-direct estimate: | 535 crore). EBITDA margins were at 48% (I-direct estimate: 54%), mainly hit by lower utilisation levels & re-pricing in offshore segment. Benefit of lower bunker cost was partly offset by marginal increase in stores, spares, repair expenses

• PAT for the second consecutive quarter was adversely impacted by exceptional impairment charge of | 145 crore in Q4FY16 (| 16 crore in Q3FY16). Accounting for the same, reported PAT was at | 58 crore against our expectation of | 299 crore. Adjusting for the exceptional loss, PAT for the quarter was at | 235 crore

• For full year FY16, revenues grew 10.7% YoY to | 3805 crore, with EBITDA of | 2028 crore (up 54% YoY) and PAT of | 1039 crore (up 39% YoY)

Offshore plays party pooper; cautious trajectory ahead… Gesco operates in the offshore segment through its wholly owned subsidiary Greatship (India) Ltd comprising ~45% of total revenues. The global utilisation level for offshore segment is at alarming 60% levels. Jack-up utilisation has dropped to 70% or lower from ~90% at the start of 2014. In addition to the same, roughly 40-50% of AHTSVs and PSVs are idle/stacked or working spot. Given the exploration and production (E&P) spending marked down for second consecutive year by ~25%, the demand for offshore is expected to remain subdued. We believe as the current order book for offshore vessels continue to remain elevated, subdued demand would continue to put pricing pressure on renewals of offshore assets. Revival in dry bulk temporary; tankers to moderate, going ahead… The average Baltic Dry Index (BDI) for Q4FY16 was at 359 level compared to 614 in Q4FY15. Though following the revival in April 2016 to 700 levels, sustainability of the same remains a concern. The current recovered levels of BDI are still way below the breakeven levels of 2000. As metal price recover, scrapping volumes for the first four months were at 17 million DWT compared to 42 million DWT in CY15. With the current order book estimated at ~20% of the existing fleet size, scrapping needs to continue to keep these BDI rates sustained. Continued higher supply and maintenance of floating reserves would keep rates moderate. Fleet size in favour of tanker has helped Gesco face the turmoil in the shipping sector. Distressed asset prices of dry bulk, offshore; headwind for NAV Gesco’s fleet profile majorly consisting of tankers has to an extent managed to offset the glut in dry bulk and offshore segments. The company is looking to manage the assets on time charter yield rather than on a spot basis. We continue to believe the current year’s performance would be difficult to replicate as the company underwent dual benefits of higher tanker prices and lower bunker costs. However, as the current year higher base catches up, the incremental growth rates would be difficult. Hence, we continue to value Gesco at P/BV of 0.5x on book value of | 650 and maintain HOLD rating with a target price of | 325.

Great Eastern Shipping (GESHIP) | 310 Rating matrix Rating : HoldTarget : | 325Target Period : 12 monthsPotential Upside : 5%

What’s changed? Target Changed from | 350 to | 325EPS FY17E Changed from | 82.1 to | 70.3EPS FY18E Changed from | 73.2 to | 62.8Rating Unchanged

Quarterly performance

Q4FY16 Q4FY15 YoY (%) Q3FY16 QoQ (%)Revenue 876.7 884.2 -0.8 947.7 -7.5EBITDA 424.4 355.1 19.5 508.9 -16.6EBITDA (%) 48.4 40.2 824 bps 53.7 -529 bpsPAT 58.2 137.0 (57.5) 274.9 -78.8

Key financials | Crore FY15 FY16 FY17E FY18ENet Sales 3,438 3,804 4,075 3,812 EBITDA 1,433 2,028 1,881 1,715 Net Profit 748 1,039 1,060 947 EPS (|) 49.6 68.9 70.3 62.8

Valuation summary

FY15 FY16 FY17E FY18EP/E 7.1 4.5 4.4 4.9Target P/E 8.2 5.9 4.7 5.3 EV / EBITDA 5.4 3.4 3.5 3.5P/BV 0.7 0.6 0.5 0.5 RoNW (%) 10.1 12.5 11.6 9.7RoCE (%) 6.3 10.2 8.4 7.3

Stock data Particular AmountMarket Capitalization (| Crore) 4,674.2 Total Debt Gross (FY16) (| Crore) 4,930.2 Cash and Investments (FY16) (| Crore) 2,625.0 EV (| Crore) 6,979.4 52 week H/L 420 / 302 Equity capital 150.8 Face value 10.0

Stock data Stocks 1M 3M 6M 1 YrGE Shipping -6.0 -6.6 -17.1 -11.9SCI 6.0 -15.2 -6.3 51.3Mercator Lines 21.9 30.1 14.7 61.7 Research Analyst

Bharat Chhoda [email protected]

Ankit Panchmatia

[email protected]


Variance analysis Q4FY16 Q4FY16E Q4FY15 YoY (%) Q3FY16 QoQ (%) Comments

Revenue 876.7 990.4 884.2 -0.8 947.7 -7.5 Shipping segment grew 13% YoY while offshore remained flat

Employee Expenses 144.9 158.5 150.1 -3.4 149.6 -3.1Fuel oil & water 53.0 84.2 122.5 -56.7 76.5 -30.8 Lower bunker costs on the back of weakness in crude prices

Hire of chartered ships & equip 28.7 29.7 35.1 -18.3 25.0 14.7Other expenses 225.8 183.2 221.5 1.9 187.8 20.2

EBITDA 424.4 534.8 355.1 19.5 508.9 -16.6 Higher repairs and maintainence charges led to increased expenses

EBITDA Margin (%) 48.4 54.0 40.2 824 bps 53.7 -529 bpsDepreciation 178.6 172.1 156.3 14.3 168.0 6.3Interest 70.5 71.1 75.6 -6.6 70.4 0.3Other income 90.8 26.8 45.5 99.6 26.3 245.3Extra-ordinary gain/loss -176.4 0.0 -26.9 556.6 5.1 NA Includes impairment expenses of 5 offshore vessels

Total Tax 31.5 19.1 5.0 532.5 27.1 -81.6PAT 58.2 299.4 137.0 -57.5 274.9 -78.8

Key Metrics Q4FY16 Q4FY15 YoY Q3FY16 QoQShipping 551.7 486.8 13.3 535.5 3.0 Dry bulk recovered and tankers continue to stay elevated

Offshore 418.5 416.4 0.5 461.5 -9.3 Global offshore utilization levels at all time low

Revenue Days (Shipping) 2,659.0 2,603.0 2.2 2,708.0 -1.8Revenue Days (Offshore) 1,918.0 1,997.0 -4.0 2,157.0 -11.1

Source: Company, ICICIdirect.com Research Change in estimates

FY17E FY18E(| Crore) Old New % Change Old New % Change CommentsRevenue 4,128.4 4,075.2 -1.3 3,932.4 3,811.7 -3.1 Our FY17 & FY18 revenue estimates taper marginally

EBITDA 1,906.7 1,881.3 -1.3 1,770.0 1,715.1 -3.1EBITDA Margin (%) 46.2 46.2 -2 bps 45.0 45.0 -2 bps We have maintained margin estimates for FY17 and FY18PAT 1,238.6 1,059.8 -14.4 1,103.4 947.0 -14.2EPS (|) 82.1 70.3 -14.4 73.2 62.8 -14.2 Given the impact from impairment; PAT & EPS estimates are adjusted accordingly

Source: Company, ICICIdirect.com Research


Company Analysis Higher supply from dry bulk fleet addition; tanker rates to stay afloat

Since 2010, the dry bulk fleet has increased the most given the higher execution from shipyards. In addition to the same, the trade scenario continues to remain subdued, resulting in BDI crashing to 30-year low levels. Subsequently, the shale gas revolution in the US together with geopolitical risks arising in Iran and the Middle & North Africa (MENA) region resulted in long-haul trade routes such as China, India and Latin-America. In terms of global fleet addition, crude and product tanker segment tonnage capacity increased at a CAGR of ~4.5% over 2007-13. As the segment added lower capacity vis-à-vis the dry bulk segment, the freight rates downfall was arrested, to a large extent. In the dry bulk segment, capacity addition of nearly 106 and 58 million dwt was done in CY12 and CY13, respectively. Though the dry bulk segment fleet addition has tapered it is expected to grow at 6% and 4% in CY15 and CY16, respectively. Consequently, freight rates continue to remain subdued. However, with a slower than expected pick-up in global seaborne trade, Gesco has revised its earlier plans of adding 5 to 3 Kamsarmax dry bulk carriers in FY17. Furthermore the company intends to add medium range product tanker, which would join the fleet by Q4FY16. Exhibit 1: World fleet growth; concern for dry bulk…!!!


Lower scrapping continued the elevated capacity

Due to decline in commodity prices, realisation of scrap remained as low as $300 a tonne. Following the same, the scrapping has seen a significant slowdown in the earlier years.

Exhibit 2: Fleet profile

Vessel Category 2015 2014 2013(in mn DWT)

Crude 338.3 0.2% 1.0% 2.0%Product 142.5 0.2% 1.0% 2.0%Bulk 778.8 4.0% 2.0% 3.0%

% of beginning fleet

ScrappingFleet as on Feb 2016



Decline in E&P expenditure, oversupply plague offshore segment Gesco through its subsidiary Greatship Ltd operates 25 offshore vessels, which includes four jack-up rigs, five platform support vessels, eight AHTSV, two MPSSV and six ROVSVs. Gesco’s offshore segment is pretty young with average age of nearly four years and is equipped with technologically advanced positioning and fire fighting equipment. Further, as safety becomes an important issue for oil companies, a young and advanced fleet due to higher efficiency and minimum downtime comes as a natural choice. Globally, an offshore vessel fleet is more than 22 years old whereas jack-up rigs are about 24 years. Exhibit 3: Fleet profile Nos. Jackup Rigs AHTSV's PSVCurrent fleet 484 1913 1428

Orderbook 129 207 261

% of Orderbook to current fleet 27% 11% 18%


Currently, the order book for jack up rigs is at 27% of current fleet (484 rigs) followed by PSV and AHTSV with order book of nearly 18% and 11% of current fleet, respectively. On the demand front, global E&P companies are expected to reduce spending by ~25% YoY. Consequently, utilisation and demand levels are expected to taper for offshore companies. Favourable fleet configuration keeps earnings afloat With a proactive management at the helm, Gesco has deliberately reduced its exposure to the dry bulk segment. Further, on the back of higher tanker rates majority of the carriers are held on spot market. The management also gains from fluctuations of asset rates on the back of trading of ships. Gesco is the second largest shipping fleet operator in the country with 31 ships totalling ~2.4 million dwt haulage capacity and an average age of 9.6 years. Gesco’s fleet profile is skewed towards the tanker segment due to which it was comparatively less impacted by the meltdown in the shipping industry. Softness in dry bulk shipping freight rates continued on the back of subdued trade environment. Following this, the revenue visibility for shipping for FY17 was at | 597 crore while for the offshore segment in the same period it was at | 1318 crore. Exhibit 4: Topline performance trend

3006.7 3091.93438.0

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Exhibit 5: Fleet profile S.NO. VESSEL NAME DWT GRT BUILT LOA (mtrs) BEAM (mtrs) DRAFT (mtrs)

1 JAG LALIT 158,344.0 81,396 2005 274.0 48.0 17.12 JAG LOK 158,280 81,396 2005 265.16 48 17.07

3 JAG LATEEF 147,080.0 80,870 2000 274.2 47.8 16.04 JAG LAKSHITA 147,093 80,870 2000 274.22 47.8 16.02

5 JAG LYALL 110,531.0 61,315 2006 244.5 42.0 15.56 JAG LATA 105,716 57,508 2003 244 42.03 14.91

7 JAG LAXMI 105,051.0 58,374 1999 243.0 42.0 14.88 JAG LAVANYA 105,010 58,374 2004 234.88 42 14.75

9 JAG APARNA 74,859.0 42,403 2009 228.0 32.3 14.310 JAG AMISHA 74,500 42,403 2009 228 32.24 14.3

11 JAG AABHA 74,841.0 42,403 2008 228.0 32.2 14.312 JAG AANCHAL 74,811 42,403 2008 228 32.25 14.3

13 JAG PRANAV 51,383.0 30,008 2005 183..00 32.2 13.214 JAG PRABHA 47,999 28,799 2004 179..99 32.2 12.47

15 JAG PRAKASH 47,400.0 29,909 2007 183.0 32.2 19.116 JAG PUSHPA 47,400 29,909 2007 183 32.2 19.1

17 JAG PRERANA 47,400.0 30,028 2007 183.0 32.2 12.418 JAG PAHEL 46,319 27,627 2004 182.85 32.22 12.21

19 JAG PANKHI 46,273.0 27,627 2003 182.9 32.2 12.220 JAG PRANAM 48,700 28,823 2004 179.99 32.2 12.62

21 JAG PADMA 47,999.0 28,799 2005 180.0 32.2 12.5

22 JAG VISHNU 49,300 42,551 1994 244.05 36 11.02

23 JAG AARATI 80,325.0 43,736 2011 229.0 32.2 14.524 JAG ADITI 80,325 43,790 2011 229 32.24 14.45

25 JAG ARYA 80,480.0 43,843 2011 229.0 32.2 14.526 JAG RISHI 56,719 33,036 2011 189.99 32.26 12.8

27 JAG RANI 56,719.0 33,036 2011 190.0 32.3 12.828 JAG RAHUL 52,364 30,011 2003 190 32.26 12.02

29 JAG RATAN 52,179.0 30,477 2001 190.0 32.3 12.330 JAG ROOPA 52,454 30,046 2006 182.87 32.26 12.02

31 JAG ARNAV 80,699.0 43,007 2015 229.0 32.3 14.4

Crude Oil Carriers

Product Carriers

LPG Carriers

Dry Bulk Carriers

31 Ships aggregating 2.4 Mn dwt


Exhibit 6: EBITDA performance trend

1435.7 1433.2

2028.31881.3

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47.142.1

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Exhibit 7: PAT performance trend – Shipping & Offshore

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748.2

1039.4 1059.8947.0

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Exhibit 8: Gesco's fleet

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Crude Product Dry Bulk LPG-VLGC Rig AHTS PSV MPSSV ROVSV

Current Fleet FY17E


Exhibit 9: Vessels on order

Approx Dwt

Medium Range (MR) Product Tanker 50000 Q4FY2016 STX (Dalian) Shipbuilding Co. Ltd.,China

3 (Three) Kamsarmax Dry Bulk Carriers 82,000(each)Q1 FY17, Q3

FY17 & Q4 FY18Jiangsu New Yangzi Shipbuilding Co. Ltd.,China

Vessel Type Expected Delivery

Built at


Exhibit 10: Owned revenue days decline sharply

2940

27182590 2599 2582

27352603 2547 2603 2574

2769 2708 2659

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Revunue Days (Standalone)



Net asset value impacted by lower utilisation In terms of net asset value, over the past 10 years (FY05-14) Gesco recorded an average NAV of | 560 on a consolidated basis with a peak of | 632 in FY08. However, since the crisis, the NAV declined at a CAGR of ~8% over FY08-13 as asset prices plummeted globally. However, on the back of steady seaborne trade growth at a CAGR of 5% between 2012 and 2014, asset prices had increased. Prices climbed sharply over FY13-14 posting growth of 30% YoY against an average of 8% in the past three years (FY11 to FY13). In Q2FY16, NAV was at | 565, which sequentially improved from | 518 in FY15. Gesco’s average market price has always traded at a discount to its NAV. However, given the current volatility in the offshore markets, the management over the past two quarters is unable to share consolidated NAV. However, standalone NAV sequentially de-grew 8% QoQ to | 337 compared to | 367 in Q3FY16. Exhibit 11: NAV to market price discount

339 362420 426

550518 536

565

310262 248 251 268

350400

361

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0.41 0.41

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Valuation Gesco has passed an enabling resolution to raise | 500 crore via issuance of unsecured non-convertible debentures (NCDs). In addition, the company at any given point of time holds ~| 2000 crore of cash. This additional liquidity will give the company financial muscle to buy and sell assets on timely basis which remains key to GE Shipping’s stable financial performance in spite of being in a cyclical industry. The composition of the fleet (crude, dry bulk, offshore) has mostly been balanced and in line with the market outlook for specific segments. The company has not shied away from reducing exposure to a segment that has a depressed outlook and adding vessels from a segment where the prospects are better. All this has been achieved with a moderate leverage compared to its peers who have been at the wrong end of the asset purchase/sale cycle or over aggressive on a specific segment resulting in fleet concentration and, thereby, highly volatile earnings. We believe GE Shipping would continue its consistent performance on the back of a diversified fleet profile. Its presence in the high margin offshore segment would enable it to have revenue visibility, going ahead, and reduce the volatility in revenues and cushion its earnings. Rates for tanker segment have remained stable and improved significantly over the past year. Going ahead, the product tanker category and gas carriers are expected to perform well on back of firmer charter rates. However, adding to the woes of dry bulk rates, which have declined/stagnant, offshore has dented the future prospects of the company. The average P/BV multiple for Gesco was 0.6x in FY14 against 0.57x in FY13. Going ahead, as overall outlook remains bleak we continue to value Gesco at 0.5x P/BV to FY18 estimated book value of | 650. Subsequently we arrive at a fair price of | 325 and have a HOLD recommendation on the stock. Exhibit 12: P/BV trend

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Exhibit 13: Valuations Sales Sales EPS EPS PE EV/EBITDA RoNW RoCE(| cr) Growth (%) (|) Growth (%) (x) (x) (%) (%)

FY15 3438.0 11.2 49.6 30.4 7.1 5.6 10.1 6.3FY16E 4120.2 19.8 83.5 68.2 3.9 3.5 14.8 10.2FY17E 4128.4 0.2 82.1 -1.6 4.0 3.6 12.9 8.7FY18E 3932.4 -4.7 73.2 -10.9 4.5 3.5 10.5 7.4



Company snapshot

Target Price: | 325

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Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event

Feb-11 Finance Ministry allows duty free import of spare parts to ship owners

Apr-11 GE Shipping sells three VLCCs under construction of 318,000 dwt each and mulls focusing on lucrative ofshore segment; BDI falls 50% in six months

Nov-11 Sharp decline in profit of 84% YoY in Q2FY12

Jul-12 GE Shipping plans to buy VLGC of about 49,700 dwt of 1990 built and is expected to join the fleet in Q2FY13

Aug-13 GE Shipping announces buy back of shares @ | 279 to the aggregate amount of | 279 crore

Sep-13 Order of offshore rig (delivery 2015), taken delivery of medium range product tanker "Jag Pranav"

Oct-13 RBI restricts FII purchase on GE Shipping after it triggers limit of 24%; GE Shipping contracts to build three new Kamsarmax ships

Jun-15 In Q1FY16 results, reports best ever EBITDA margins 30.3%, since FY10

Nov-15 In Q2FY16, revenues grow 9% with EBITDA margins at 57%

Feb-16 In Q3FY16, revenues grow 8% YoY. EBITDA margins at 54%. BDI at lowest level of less than 300

May-16 Reported Q4FY16 results. Revenue remained flattish. EBITDA margins at 48%. Guided softness in offshore segment

Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m)1 Sheth (Bharat Kanaiyalal) 31-Mar-16 0.10 14.8 0.02 Sheth (Ravi Kanaiyalal) 31-Mar-16 0.09 14.31 (0.05)3 Nalanda Capital Pte Ltd 31-Mar-16 0.07 10.52 0.004 ICICI Prudential Asset Management Co. Ltd. 31-Dec-14 0.05 7.96 1.005 ICICI Prudential Life Insurance Company Ltd. 31-Mar-16 0.04 5.52 0.026 Laadki Trading & Investment, Ltd. 31-Mar-16 0.03 4.62 0.007 SBI Funds Management Pvt. Ltd. 31-Mar-16 0.02 3.55 0.528 General Insurance Corporation of India 31-Mar-16 0.02 3.24 (0.03)9 Dimensional Fund Advisors, L.P. 31-Jan-16 0.02 2.45 (0.00)10 Sheth (Asha Vasant) 31-Mar-16 0.01 2.12 0.00

(in %) Mar-15 Jun-15 Sep-15 Dec-15 Mar-16Promoter 30.4 30.4 30.4 30.5 30.4FII 22.1 22.9 22.0 22.2 5.8DII 19.1 19.0 19.9 19.9 36.8Others 28.3 27.7 27.7 27.4 27.0

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor name Value Shares Investor name Value SharesNordea Funds Oy 6.96 1.48 Robeco Institutional Asset Management B.V. -1.45 -0.26SBI Funds Management Pvt. Ltd. 2.43 0.52 Religare Invesco Asset Management Company Private Limited -0.45 -0.08Norges Bank Investment Management (NBIM) 1.00 0.18 UTI International (Singapore) Pvt. Ltd. -0.27 -0.07Franklin Templeton Asset Management (India) Pvt. Ltd. 0.49 0.12 L&T Investment Management Limited -0.23 -0.06Sheth (Ravi Kanaiyalal) 0.24 0.05 Union KBC Asset Management Company Pvt. Ltd. -0.23 -0.06

Buys Sells

Source: Reuters, ICICIdirect.com Research


.

Financial summary Profit and loss statement | Crore (Year-end March) FY15 FY16E FY17E FY18ETotal operating Income 3,438.0 3,804.5 4,075.2 3,811.7Growth (%) 11.2 10.7 7.1 -6.5Employee Expenses 557.9 595.7 727.9 755.8Fuel, Oil & Water 506.5 290.0 364.0 348.8Hire of Chartered ships 119.3 105.8 131.4 122.8Spares & Stores 211.6 222.3 262.9 245.6Repairs & maintainence 189.03 186.06 181.99 170.06Other 420.5 376.4 525.7 453.5Total Expenditure 2,004.8 1,776.2 2,193.9 2,096.6EBITDA 1,433.2 2,028.3 1,881.3 1,715.1Growth (%) -0.2 41.5 -7.2 -8.8Depreciation 614.4 674.6 730.8 720.6Interest 300.6 284.6 263.9 255.1Other Income 165.1 171.0 160.2 182.8PBT 683.3 1,240.0 1,046.8 922.2Extraord Income / (Exp) 114.8 103.1 105.1 107.2Total Tax 49.9 110.1 92.2 82.4PAT 748.2 1,039.4 1,059.8 947.0Growth (%) 30.4 38.9 2.0 -10.6EPS (|) 49.6 68.9 70.3 62.8


Cash flow statement | Crore (Year-end March) FY15 FY16E FY17E FY18EProfit after Tax 748.2 1,039.4 1,059.8 947.0Add: Depreciation 614.4 674.6 730.8 720.6(Inc)/dec in Current Assets -50.3 72.3 -267.8 53.7Inc/(dec) in CL and Provisions 9.8 -228.7 416.3 -64.6Others 123.5 0.0 250.0 250.0CF from operating activities 1,746.3 1,842.3 2,452.9 2,161.9(Inc)/dec in Investments -6.6 -11.9 18.5 0.0(Inc)/dec in Fixed Assets -1,743.1 -852.7 -1,330.8 -1,320.6Others 0.0 0.0 0.0 0.0CF from investing activities -1,749.7 -864.6 -1,312.3 -1,320.6Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0Inc/(dec) in loan funds 823.2 -532.4 -340.7 -750.0Dividend paid & dividend tax -149.9 -158.8 -158.8 -158.8Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0Others -878.4 1,025.3 -325.5 137.0CF from financing activities 367.3 -732.8 -1,179.6 -1,026.9Net Cash flow 363.9 244.9 -39.0 -185.6Opening Cash 2,016.2 2,380.1 2,625.0 2,585.9Closing Cash 2,380.1 2,625.0 2,585.9 2,400.4


Balance sheet | Crore (Year-end March) FY15 FY16E FY17E FY18ELiabilitiesEquity Capital 150.8 150.8 150.8 150.8Reserve and Surplus 7,279.8 8,133.1 8,961.5 9,649.8Total Shareholders funds 7,430.6 8,283.9 9,112.3 9,800.5Total Debt 5,462.6 4,930.2 4,589.5 3,839.5Long Term Provisions 33.4 37.6 37.6 37.6Minority Int / Others 0.0 0.0 0.0 0.0Total Liabilities 12,926.6 13,251.7 13,739.4 13,677.6

AssetsGross Block 15,161.9 15,740.0 16,740.0 17,740.0Less: Acc Depreciation 4,047.0 4,721.7 5,452.4 6,173.1Net Block 11,114.9 11,018.3 11,287.5 11,566.9Capital WIP 0.0 0.0 0.0 0.0Total Fixed Assets 11,114.9 11,018.3 11,287.5 11,566.9Oth non-current assets 132.2 426.3 140.8 82.7Investments 32.6 44.5 26.0 26.0Inventory 140.1 113.2 166.2 155.3Debtors 334.6 320.6 387.8 362.4Loans and Advances 129.5 90.2 243.8 227.8Other Current Assets 1,270.2 992.9 1,696.9 1,587.1Cash 2,380.1 2,625.0 2,585.9 2,400.4Total Current Assets 4,254.5 4,141.9 5,080.6 4,733.0Creditors 215.5 223.6 332.4 310.6Oth liab and provisions 2,393.1 2,156.2 2,463.7 2,420.9Total Current Liabilities 2,608.5 2,379.8 2,796.1 2,731.5Net Current Assets 1,645.9 1,762.0 2,284.5 2,001.4Others Assets 0.9 0.6 0.6 0.6Application of Funds 12,926.6 13,251.7 13,739.4 13,677.6


Key ratios (Year-end March) FY15 FY16E FY17E FY18EPer share data (|)EPS 49.6 68.9 70.3 62.8Cash EPS 90.4 113.7 118.8 110.6BV 492.8 549.4 604.3 650.0DPS 12.8 13.6 13.6 13.6Cash Per Share 157.9 174.1 171.5 159.2Operating Ratios (%)EBITDA Margin 42.1 53.7 46.5 45.4PBT / Total Operating income 19.9 32.6 25.7 24.2PAT Margin 22.0 27.5 26.2 25.1Inventory days 14.9 15.0 15.0 15.0Debtor days 35.8 35.0 35.0 35.0Creditor days 22.9 30.0 30.0 30.0Return Ratios (%)RoE 10.1 12.5 11.6 9.7RoCE 6.3 10.2 8.4 7.3RoIC 7.1 9.8 9.5 8.4Valuation Ratios (x)P/E 7.1 4.5 4.4 4.9EV / EBITDA 5.4 3.4 3.5 3.5EV / Net Sales 2.2 1.8 1.6 1.6Market Cap / Sales 1.3 1.2 1.1 1.2Price to Book Value 0.7 0.6 0.5 0.5Solvency RatiosDebt/EBITDA 3.8 2.4 2.4 2.2Debt / Equity 0.7 0.6 0.5 0.4Current Ratio 1.6 1.7 1.8 1.7Quick Ratio 19.1 18.0 14.8 14.7



ICICIdirect.com coverage universe (Shipping) CMP Mcap

Sector/Company (|) TP (|) Rating (| Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17EG.E Shipping 310 325 HOLD 4,674.2 49.6 83.5 82.1 7.1 3.9 4.0 5.6 3.5 3.6 6.3 10.2 8.7 10.1 14.8 12.9Reliance Defence & Eng. 66 80 HOLD 4,859.0 -5.4 -10.8 -3.3 NA NA NA 121.6 -66.4 45.6 -0.4 -4.6 0.5 -40.5 -10.8 -1.0SCI 71 65 HOLD 3,307.2 4.3 10.0 10.1 23.0 9.9 9.8 8.2 5.8 5.7 0.5 3.4 3.3 2.7 6.6 6.3

RoCE (%) RoE (%)EPS (|) P/E (x) EV/EBITDA (x)



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Pankaj Pandey Head – Research [email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093

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Target Period : 12 months Doomsday in offshore; tankers...

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