February 8, 2017 Great Eastern Shipping (GESHIP)content.icicidirect.com/mailimages/IDirect_GEShipping_Q3FY17.pdf · February 8, 2017 ICICI Securities Ltd ... summer holiday season

February 8, 2017

ICICI Securities Ltd | Retail Equity Research

Result Update

Continued weakness in offshore; tankers weak • Gesco’s revenues for Q2FY17 de-grew 23% YoY to | 749.4 crore (I-

direct estimate: | 833.7 crore). On account of historic low utilisation levels for offshore segment, revenues of the segment de-grew 22.5% YoY to | 357.5 crore. However, with a recovery in BDI and tanker rates, revenues from the shipping segment grew 6% YoY to | 569.4 crore. Total revenue days for the shipping & offshore segment were at 3428 days and 1723 days, respectively

• Lower utilisation levels in the offshore segment coupled with higher employee expenses resulted in EBITDA de-growth of 30.5% to | 386.6 crore (vs. I-direct estimate: | 429.4 crore). EBITDA margins remained pressured, down 573 bps YoY to 51.6% compared to 55.3% in Q2FY17 and 57.3% in Q3FY16

• Increase in interest expenses (up 25.7% YoY) coupled with higher taxation (up 14.4% YoY) & depreciation (up 19% YoY) completely offset the rise in other income, which trebled in the quarter. Subsequently, PAT (excluding MTM losses) nearly halved to | 131.8 crore (vs. our expected | 171.8 crore). However, incorporating MTM gains worth | 106.6 crore, reported PAT was at | 238.4 crore

Tankers continue to languish; dry bulk remains sticky Baltic Dry Index (BDI) continues to exhibit its seasonal pattern, which reaches its annual peak in October-December on the back of end of the summer holiday season and nearing winter. BDI moved to a two-year high of 1257 in December 2016 from a low of 290 in February 2016. China’s coal and iron ore imports remained upbeat during the quarter. In addition to the same, with YTD scrappage of 3.57% during the year, dry bulk fleet in CY16 grew by a mere 1.87%. Subsequently, average TCY for the quarter of dry bulk grew 10% YoY (up 10% QoQ) to $6972/day. Tanker rates continued their bearish trajectory impacted by delivery of 13 VLCCs during the quarter. In addition to the same, large import markets like India and China started sourcing incremental crude from the Middle East, rather than the Atlantic Basin that impacted the ton mile demand. We believe that with scheduled fleet addition of ~7% each for product & crude tankers and 9% for dry bulk, oversupply would continue to prevail. Given the grim oversupply shipping scenario, we believe the subdued rates would continue thereby capping revenue growth rates. Offshore remains a concern; outlook bearish, recommend SELL… Capex spending for exploration & production (E&P) was marked down for a third consecutive year by ~20%. Hence, utilisation levels across offshore assets continued to decline. For premium jack ups, lack of contract renewals led utilisation levels to come down from around 90% at the start of 2014 to around 55% as on date. In case of platform supply vessels (PSVs) and anchor handling tug cum supply vessels (AHTSVs) more than half the fleet was either idle/stacked or working in spot market at a very low utilisation. With ~45% of total revenues contributed by the offshore segment, revenues from the same continue to decline for a sixth consecutive quarter. Approximately, four vessels are idle while an additional three are expected to add to the idle fleet in FY17. The outlook for offshore continues to remain bleak, which would further put pricing pressure on renewals of offshore assets. The glut like situation in the tanker, dry bulk and offshore segments affirm our cautious view on the shipping sector. We roll over our estimates to FY19 and assign a P/BV multiple of 0.45x. We have a SELL rating with a target price of | 315.

Great Eastern Shipping (GESHIP) | 375 Rating matrix Rating : SellTarget : | 315Target Period : 12 monthsPotential Upside : -16%

What’s changed? Target UnchangedEPS FY17E Changed from | 73.1 to | 61.8EPS FY18E Changed from | 69.6 to | 68.9EPS FY19E Introduced at | 70.1Rating Changed from Hold to Sell

Quarterly performance

Q3FY17 Q3FY16 YoY (%) Q2FY17 QoQ (%)Revenue 749.4 971.0 -22.8 813.7 -7.9EBITDA 386.6 556.7 (30.5) 450.2 -14.1EBITDA (%) 51.6 57.3 -573 bps 55.3 -373 bpsPAT 238.4 358.1 (33.4) 269.0 -11.4

Key financials | Crore FY16 FY17E FY18E FY19ENet Sales 3,804 3,087 3,363 3,583 EBITDA 2,028 1,620 1,656 1,764 Net Profit 1,039 932 1,038 1,058 EPS (|) 68.9 61.8 68.9 70.1

Valuation summary

FY16 FY17E FY18E FY19EP/E 5.1 5.7 5.1 5.0Target P/E 5.9 5.3 4.8 4.7 EV / EBITDA 3.8 4.9 4.3 3.1P/BV 0.6 0.6 0.5 0.5 RoNW (%) 12.5 10.4 10.7 10.0RoCE (%) 10.2 6.0 5.9 6.4

Stock data Particular AmountMarket Capitalization (| Crore) 5,654.3 Total Debt Gross (FY16) (| Crore) 4,930.2 Cash and Investments (FY16) (| Crore) 2,625.0 EV (| Crore) 7,959.5 52 week H/L 410 / 275 Equity capital 150.8 Face value 10.0

Stock data Stocks 1M 3M 6M 1 YrMercator 10.8 10.4 13.9 134.6GE Shipping Co -0.5 6.6 5.3 15.7S C I 8.0 0.9 -3.7 -17.0Allcargo Logist. 2.1 -7.8 -5.8 -4.4 Research Analyst

Bharat Chhoda [email protected]

Ankit Panchmatia

[email protected]

ICICI Securities Ltd | Retail Equity Research Page 2

Variance analysis Q3FY17 Q1FY17E Q3FY16 YoY (%) Q2FY17 QoQ (%) Comments

Revenue 749.4 936.0 971.0 -22.8 813.7 -7.9 Shipping grew 6% YoY while offshore de-grew 23%

Employee Expenses 147.0 149.8 150.4 -2.3 150.0 -2.0Fuel oil & water 47.5 65.5 74.5 -36.3 43.2 9.9 Lower bunker costs on the back of weakness in crude prices

Hire of chartered ships & equip 19.2 28.1 25.0 -23.2 21.8 -11.8Other expenses 149.1 229.3 164.4 -9.3 148.6 0.3 Decline due to lower repair & maintenance expenses

EBITDA 386.6 463.3 556.7 -30.5 450.2 -14.1 Decline in revenues resulted in EBITDA de-growth

EBITDA Margin (%) 51.6 49.5 57.3 -573 bps 55.3 -373 bpsDepreciation 198.8 180.3 167.1 18.9 186.8 6.4Interest 89.7 71.2 71.3 25.7 95.3 -5.8Other income 64.6 91.7 19.4 232.4 54.8 17.8Extra-ordinary gain/loss 106.6 0.0 47.5 124.2 76.2 NATotal Tax 31.0 18.2 27.1 14.4 30.1 -10.0PAT 238.4 285.3 358.1 -33.4 269.0 -11.4

Key Metrics Q3FY17 Q3FY16 YoY Q2FY17 QoQShipping 569.4 535.5 6.3 564.7 0.8 Recovery in dry bulk supported the growth

Offshore 357.5 461.5 -22.5 386.5 -7.5 Offshore utilisation levels continue to remain at all-time low

Revenue Days (Shipping) 3,428.0 2,708.0 26.6 3,232.0 6.1Revenue Days (Offshore) 1,723.0 2,157.0 -20.1 1,884.0 -8.5

Source: Company, ICICIdirect.com Research Change in estimates

FY17E FY18E FY19E(| Crore) Old New % Change Old New % Change Introduced CommentsRevenue 3,599.0 3,086.5 -14.2 3,641.4 3,362.6 -7.7 3,583.3 Slower than expected recovery in offshore and tanker rates

EBITDA 1,886.4 1,619.9 -14.1 1,791.9 1,656.0 -7.6 1,763.8EBITDA Margin (%) 52.4 52.5 7 bps 49.2 49.2 4 bps 49.2 MaintainedPAT 1,114.3 931.5 -16.4 1,080.4 1,038.4 -3.9 1,057.7EPS (|) 73.9 61.8 -16.4 71.7 68.9 -3.9 70.1

Source: Company, ICICIdirect.com Research


Company Analysis Oversupplies to plague dry bulk, tanker rates… 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 rising in Iran and 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% in 2007-13. As the segment added lower capacity vis-à-vis the dry bulk segment, the freight rates decline 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, the company’s orderbook is at two Suezmax crude carriers, which are expected to join the fleet by Q4FY17. Exhibit 1: World fleet growth; concern for dry bulk…


Exhibit 2: World fleet growth; concern for dry bulk…!!!

Vessel Category

(in mn DWT)

Crude 353 13.0% 8.0% 5.0% 0.0%Product 149 9.0% 6.0% 2.0% 1.0%Bulk 791 9.0% 6.0% 2.0% 1.0%

Total CY 2017 CY 2018 CY 2019+

Fleet as on July 2016Gross Fleet Addition (on current fleet)


Lower scrapping continues elevated capacity Due to a decline in commodity prices, realisation of scrap remained as low as $300 per ton. Following the same, scrapping has seen a significant slowdown in earlier years. Exhibit 3: Low scrapping adding to woes…

Vessel Category 2016 YTD 2015 2014 2013

(in mn DWT)

Crude 353 0.3% 0.2% 1.6% 2.4%

Product 149 0.5% 0.6% 1.2% 1.7%

Bulk 791 3.6% 4.0% 2.3% 3.4%

Fleet as on November 2016

Scrapping



Offshore segment plagued by decline in E&P expenditure and oversupply 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 4: Oversupply in offshore segment… Nos. Jackup Rigs AHTSV's PSV

Current fleet 540 2126 1626

Orderbook 108 176 210

% of Orderbook to current fleet 20% 8% 13%


Tankers reverse trend; earnings to remain awry… 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. Exhibit 5: Revenue trend…

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Exhibit 6: Fleet profile S.NO. VESSEL NAME DWT GRT BUILT LOA (mtrs) BEAM (mtrs) DRAFT (mtrs)

1 JAG LALIT 158,344 81,396 2005 274.0 48.0 17.12 JAG LOK 158,280 81,396 2005 265.2 48.0 17.1

3 JAG LATEEF 147,080 80,870 2000 274.2 47.8 16.04 JAG LAKSHITA 147,093 80,870 2000 274.2 47.8 16.0

5 JAG LYALL 110,531 61,315 2006 244.5 42.0 15.56 JAG LATA 105,716 57,508 2003 244.0 42.0 14.9

7 JAG LAVANYA 105,010 58,374 2004 234.9 42.0 14.88 JAG LAADKI 150,284 78,918 2000 264.5 48.0 16.0

9 JAG LEELA 105,525 57,249 2011 244.0 42.0 15.010 JAG LAXMI 105,525 57,249 2012 235.8 42.0 15.0

11 JAG APARNA 74,859.0 42,403 2009 228.0 32.3 14.3

12 JAG AMISHA 74,500.0 42,403 2009 228.0 32.2 14.3

13 JAG AABHA 74,841.0 42,403 2008 228.0 32.2 14.3

14 JAG AANCHAL 74,811.0 42,403 2008 228.0 32.3 14.3

15 JAG PRANAV 51,383.0 30,008 2005 183..00 32.2 13.2

16 JAG PRABHA 47,999.0 28,799 2004 179..99 32.2 12.5

17 JAG PRAKASH 47,400.0 29,909 2007 183.0 32.2 19.1

18 JAG PUSHPA 47,400.0 29,909 2007 183.0 32.2 19.1

19 JAG PRERANA 47,400.0 30,028 2007 183.0 32.2 12.4

20 JAG PAHEL 46,319.0 27,627 2004 182.9 32.2 12.2

21 JAG PANKHI 46,273.0 27,627 2003 182.9 32.2 12.2

22 JAG PRANAM 48,700.0 28,823 2004 180.0 32.2 12.6

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

24 JAG PUNIT 49,717 29,967 2016 183.1 32.2 13.3

25 JAG POOJA 48,539 28,823 2005 180.0 32.2 12.6

26 JAG VISHNU 49,300 42,551 1994 244.1 36.0 11.0

27 JAG VIDHI 49,849 44,694 1996 230.0 36.6 10.8

28 JAG ANAND 1,79,250 93,227 2011 291.9 45.0 18.2

29 JAG AARATHI 80,325.0 43,736 2011 229.0 32.2 14.5

30 JAG ADITI 80,325.0 43,790 2011 229.0 32.2 14.5

31 JAG ARYA 80,480.0 43,843 2011 229.0 32.2 14.5

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

33 JAG AJAY 82,094.0 44,127 2016 229.0 32.3 14.5

34 JAG AALOK 82,023.0 44,113 2016 229.0 32.3 14.5

35 JAG AKSHAY 82,044.0 44,113 2016 229.0 32.3 14.5

36 JAG RISHI 56,719.0 33,036 2011 190.0 32.3 12.8

37 JAG RANI 56,719.0 33,036 2011 190.0 32.3 12.8

38 JAG RAHUL 52,364.0 30,011 2003 190.0 32.3 12.0

39 JAG RATAN 52,179.0 30,477 2001 190.0 32.3 12.3

40 JAG ROOPA 52,454.0 30,046 2006 182.9 32.3 12.0

41 JAG AMAR 82,084.0 44,127 2017 229.0 32.3 14.5

42 JAG RADHA 58,133.0 32,354 2009 185.8 32.3 12.8

Crude Oil Carriers

Product Carriers

LPG Carriers

Dry Bulk Carriers

42 Ships aggregating 3.38 Mn dwt



Exhibit 7: EBITDA performance trend

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Exhibit 8: PAT performance trend – Shipping & offshore

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Exhibit 9: Gesco's fleet

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

Current Fleet FY17E


Exhibit 10: Vessels on order

Approx Dwt

2 Suezmaxes Crude Carriers 157,672 (Each) Q4FY17 Samsung Heavy Industries Co. Ltd, South Korea

Vessel TypeExpected Delivery

Built at



Exhibit 11: Owned revenue days indicating an uptake…

2599 25822735

2603 2547 2603 2574

2777 2708 26592574

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Net asset value adversely 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% in 2012 and 2014, asset prices had increased. Prices climbed sharply in FY13-14 posting growth of 30% YoY against an average of 8% in the past three years (FY11-13). 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, in the past five quarters, is unable to share consolidated NAV. The standalone NAV is at | 321. However, the management has affirmed the range of the consolidated NAV in a range of | 375-440. Exhibit 12: NAV to market price discount

339 362420 426

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565

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Valuation Gesco in 9MFY17 raised ~| 900 crore via issuance of unsecured non-convertible debentures (NCDs). In addition, the company prefers to hold ~| 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 that 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 0.64x in FY14 against 0.57x in FY13. Going ahead, as the overall outlook remains bleak we roll over our estimates to FY19 and value Gesco at 0.45x P/BV on estimated book value of ~| 700. Subsequently, we arrive at a fair price of | 315 and have a SELL recommendation on the stock. Exhibit 13: P/BV trend

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Exhibit 14: 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 6.3FY16 3804.5 10.7 68.9 38.9 5.1 3.8 12.5 10.2FY17E 3086.5 -18.9 61.8 -10.4 5.7 4.9 10.4 6.0FY18E 3362.6 8.9 68.9 11.5 5.1 4.3 10.7 5.9FY19E 3583.3 6.6 70.1 1.9 5.0 3.1 10.0 6.4



Recommendation History vs. Consensus

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Series1 Idirect target Consensus Target Mean % Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research Key events 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 Reports Q4FY16 results. Revenue remains flattish. EBITDA margins at 48%. Guided softness in offshore segment

Aug-16 Reports Q1FY17 results. Shipping and offshore continue to remain soft. Revenues de-grow 16% YoY. EBITDA margins at 55%

Oct-16 Reports Q2FY17 results. Revenues de-grew 21%. EBITDA margins at 54%. Offshore segment continues to remain weak. Raised | 400 crore via NCDsJan-17 Reports Q3FY17 results. Shipping grows 6% while offshore de-grew 23%. EBITDA margins at 51.6%. Raises additional | 500 crore via NCDs

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) 30-Sep-16 0.10 14.8 0.02 ICICI Prudential Asset Management Co. Ltd. 31-Dec-16 0.10 14.50 (0.16)3 Sheth (Ravi Kanaiyalal) 30-Sep-16 0.10 14.36 0.004 Nalanda Capital Pte Ltd 30-Sep-16 0.07 10.52 0.005 Fidelity Management & Research Company 31-Dec-16 0.04 6.68 0.006 ICICI Prudential Life Insurance Company Ltd. 30-Sep-16 0.04 5.51 (0.01)7 SBI Funds Management Pvt. Ltd. 30-Sep-16 0.04 5.40 0.608 Laadki Trading & Investment, Ltd. 30-Sep-16 0.03 4.62 0.009 UTI Asset Management Co. Ltd. 31-Dec-16 0.02 3.43 (0.11)10 General Insurance Corporation of India 30-Sep-16 0.02 3.24 0.00

(in %) Sep-15 Dec-15 Mar-16 Jun-16 Sep-16Promoter 30.4 30.5 30.4 30.4 30.2FII 22.0 22.2 5.8 6.8 23.2DII 19.9 19.9 36.8 35.3 19.2Others 27.7 27.4 27.0 27.4 27.4

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor name Value Shares Investor name Value SharesLife Insurance Corporation of India 9.99 1.89 First State Investments (Singapore) -2.96 -0.56SBI Funds Management Pvt. Ltd. 3.18 0.60 ICICI Prudential Asset Management Co. Ltd. -0.87 -0.16Stewart Investors 2.21 0.42 UTI Asset Management Co. Ltd. -0.61 -0.11Templeton Asset Management Ltd. 0.14 0.03 Baroda Pioneer Asset Management Company Limited -0.45 -0.08Taurus Asset Management Co. Ltd. 0.10 0.02 Acadian Asset Management LLC -0.05 -0.01

Buys Sells

Source: Reuters, ICICIdirect.com Research


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Financial summary Profit and loss statement | Crore (Year-end March) FY16 FY17E FY18E FY19ETotal operating Income 3,804.5 3,086.5 3,362.6 3,583.3Growth (%) 10.7 -18.9 8.9 6.6Employee Expenses 595.7 488.9 599.4 639.1Fuel, Oil & Water 290.0 152.8 233.1 248.5Hire of Chartered ships 105.8 91.7 108.2 115.4Spares & Stores 222.3 198.6 216.4 230.8Repairs & maintainence 186.06 137.49 149.85 159.76Other 376.4 397.2 399.6 426.0Total Expenditure 1,776.2 1,466.6 1,706.6 1,819.5EBITDA 2,028.3 1,619.9 1,656.0 1,763.8Growth (%) 41.5 -20.1 2.2 6.5Depreciation 674.6 730.8 775.8 798.3Interest 284.6 357.0 366.8 318.0Other Income 171.0 320.3 463.1 456.2PBT 1,240.0 852.4 976.5 1,103.7Extraord Income / (Exp) 103.1 206.1 210.2 105.1Total Tax 110.1 127.0 148.3 151.1PAT 1,039.4 931.5 1,038.4 1,057.7Growth (%) 38.9 -10.4 11.5 1.9EPS (|) 68.9 61.8 68.9 70.1


Cash flow statement | Crore (Year-end March) FY16 FY17E FY18E FY19EProfit after Tax 1,039.4 931.5 1,038.4 1,057.7Add: Depreciation 674.6 730.8 775.8 798.3(Inc)/dec in Current Assets 72.3 -67.4 -55.7 -44.7Inc/(dec) in CL and Provisions -228.7 64.2 127.6 81.5Others 0.0 250.0 250.0 250.0CF from operating activities 1,842.3 2,266.1 2,502.9 2,460.8(Inc)/dec in Investments -11.9 18.5 0.0 0.0(Inc)/dec in Fixed Assets -852.7 -1,330.8 -1,375.8 -398.3Others 0.0 0.0 0.0 0.0CF from investing activities -864.6 -1,312.3 -1,375.8 -398.3Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0Inc/(dec) in loan funds -532.4 1,050.0 -750.0 -750.0Dividend paid & dividend tax -374.4 -158.8 -158.8 -158.8Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0Others 458.6 -280.0 91.4 124.8CF from financing activities -732.8 254.2 -1,184.1 -1,102.0Net Cash flow 244.9 1,208.0 -57.0 960.5Opening Cash 2,380.1 2,625.0 3,833.0 3,776.0Closing Cash 2,625.0 3,833.0 3,776.0 4,736.5


Balance sheet | Crore (Year-end March) FY16 FY17E FY18E FY19ELiabilitiesEquity Capital 150.8 150.8 150.8 150.8Reserve and Surplus 8,133.1 8,773.8 9,578.5 10,402.4Total Shareholders funds 8,283.9 8,924.6 9,729.2 10,553.2Total Debt 4,930.2 5,980.2 5,230.2 4,480.2Long Term Provisions 37.6 37.6 37.6 37.6Minority Int / Others 0.0 0.0 0.0 0.0Total Liabilities 13,251.7 14,942.4 14,997.1 15,071.0

AssetsGross Block 15,740.0 16,740.0 17,740.0 17,740.0Less: Acc Depreciation 4,721.7 5,452.4 6,228.2 7,026.5Net Block 11,018.3 11,287.5 11,511.7 10,713.4Capital WIP 0.0 0.0 0.0 0.0Total Fixed Assets 11,018.3 11,287.5 11,511.7 10,713.4Oth non-current assets 426.3 351.4 197.3 55.1Investments 44.5 26.0 26.0 26.0Inventory 113.2 125.6 136.8 145.9Debtors 320.6 293.0 319.3 340.4Loans and Advances 90.2 184.2 200.7 214.0Other Current Assets 992.9 1,285.2 1,400.1 1,492.0Cash 2,625.0 3,833.0 3,776.0 4,736.5Total Current Assets 4,141.9 5,720.9 5,833.0 6,928.9Creditors 223.6 251.1 273.7 291.8Oth liab and provisions 2,156.2 2,192.9 2,297.9 2,361.2Total Current Liabilities 2,379.8 2,444.0 2,571.6 2,653.0Net Current Assets 1,762.0 3,276.9 3,261.4 4,275.9Others Assets 0.6 0.6 0.6 0.6Application of Funds 13,251.7 14,942.4 14,997.1 15,071.0


Key ratios (Year-end March) FY16 FY17E FY18E FY19EPer share data (|)EPS 68.9 61.8 68.9 70.1Cash EPS 113.7 110.2 120.3 123.1BV 549.4 591.9 645.3 699.9DPS 31.2 13.6 13.6 13.6Cash Per Share 174.1 254.2 250.4 314.1Operating Ratios (%)EBITDA Margin 53.7 53.0 49.7 49.7PBT / Total Operating income 32.6 27.6 29.0 30.8PAT Margin 27.5 30.5 31.2 29.8Inventory days 15.0 15.0 15.0 15.0Debtor days 35.0 35.0 35.0 35.0Creditor days 30.0 30.0 30.0 30.0Return Ratios (%)RoE 12.5 10.4 10.7 10.0RoCE 10.2 6.0 5.9 6.4RoIC 9.8 8.4 9.3 10.3Valuation Ratios (x)P/E 5.1 5.7 5.1 5.0EV / EBITDA 3.8 4.9 4.3 3.1EV / Net Sales 2.0 2.6 2.1 1.5Market Cap / Sales 1.4 1.9 1.7 1.6Price to Book Value 0.6 0.6 0.5 0.5Solvency RatiosDebt/EBITDA 2.4 3.7 3.2 2.5Debt / Equity 0.6 0.7 0.5 0.4Current Ratio 1.7 2.3 2.3 2.6Quick Ratio 18.0 22.3 20.8 23.2



ICICIdirect.com coverage universe (Shipping) CMP Mcap

Sector/Company (|) TP (|) Rating (| Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18EG.E Shipping 375 315 SELL 5,654.3 68.9 61.8 68.9 5.1 5.7 5.1 3.8 4.9 4.3 10.2 6.0 5.9 12.5 10.4 10.7Reliance Defence & Eng. 59 64 BUY 4,343.6 -8.0 -5.0 -4.3 NA NA NA -73.5 115.4 71.2 -4.1 -1.1 -0.7 -29.3 -15.9 -15.7SCI 70 60 HOLD 3,260.6 8.1 2.4 3.7 7.2 24.5 15.6 5.1 8.2 7.0 4.8 1.3 2.0 5.5 1.6 2.4Dredging Corp Ltd. 464 400 HOLD 1,299.2 28.5 9.7 26.7 16.3 47.7 17.4 11.5 15.7 11.6 7.4 5.1 7.0 5.3 1.6 4.2

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



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