@RajeevJ wrote:
Shreyas Shipping, a transworld group Co. is not a conventional shipping Co. Being mainly into Indian coastal shipping, it is largely unaffected by the movement of the world Contex time charter shipping Index.
Transporting goods by sea is at least twice as cheap when compared to other modes like road & rail. It is also hugely environment friendly by reducing both the traffic as well as pollution on the roads. What has been lacking is adequate infrastructure, something that is set to change with the Govt.’s ambitious Sagar Mala project which will give a huge fillip in developing new ports as well as other infrastructure around it. Shreyas is set to be a major beneficiary as coastal shipping gains momentum.
The potential for coastal shipping is tremendous. In addition to its regular business, the Co. recently tied up with RINL for the transportation of its steel products from its factory to its warehouses in different parts of the country. Attaching a note which also throws more light on the Co’s fleet & types of ships.
The Co. has been doing well in the current year, having added three more ships taking its current tally to 13. The full impact of this will be seen in Q4. Its operating margins are around 20% & the mgt. is quite optimistic of maintaining them. Q3 was marginally impacted with the new ships gradually being deployed. It could do Sales & PAT of about 635 Crs & 85 Crs respectively for 2018-19 on a stand alone basis.
The Co. had a fully owned subsidiary Shreyas Relay Systems Ltd., which was the logistic arm looking at end to end connectivity for its customers. Last year, Relay acquired the business of Balaji Shipping, another company of the same promoters, based out of UAE in exchange of 70% stake in Shreyas Relay Systems, thereby making Shreyas Relay an associate. This could potentially be a win-win for both as Balaji, which owns containers, runs a very successful asset light model business (does not own ships). Shreyas’ gains from its 30% stake in Relay could be twice its last year’s gains of 6 crs when it was fully owned. The consolidated PAT for the Co. for 18-19 could be in the vicinity of 100 crs. The Co. trades at a current market cap at about 1100 crs.
The Promoters merging Balaji Shipping with Shreyas through Relay is perhaps being done with an eye on the market cap as from now on profits from Balaji will also be indirectly reflected in the Co. The promoters hold a high 73.25% stake in the Co. This was perhaps why Balaji could not be merged with the Co. directly as the promoter stake would have gone beyond the stipulated 75%. Perhaps at higher valuations, the promoters may merge both the Co’s, & dilute equity at higher levels.
The main concern to the story is the pace at which the infrastructure for rapid growth of coastal shipping can be developed. Another concern is that coastal shipping as a concept is only gradually gaining traction. These concerns however are not coming in the way of the Company’s performance in the current year as also in the foreseeable future as is evident from the results of the last few qtrs.
(in Cr.) 17-Dec 17-Sep 17-Jun 17-Mar 16-Dec FY 16-17 Income Statement Revenue 140.73 123.51 117.86 95.97 96.68 370.16 Other Income 2.6 0.93 1.43 2.27 0.26 5.12 Total Income 143.32 124.44 119.29 98.24 96.94 375.28 Expenditure -118.3 -99.34 -95.03 -106.89 -79.21 -352.3 Interest -3.79 -2.67 -2.75 -2.44 -2.6 -9.96 PBDT 25.03 25.11 24.26 -8.65 15.13 22.98 Depreciation -6.03 -5.26 -4.63 -2.49 -5.87 -17.56 PBT 19 19.85 19.63 -11.14 9.26 5.42 Tax -0.14 -0.15 -0.46 -0.51 -0.17 -1.35 Net Profit 18.86 19.7 19.17 -11.65 9.09 4.08 Equity 21.96 21.96 21.96 21.96 21.96 21.96 EPS 8.59 8.97 8.73 -5.3 4.14 1.86 CEPS 11.33 11.37 10.84 -4.17 6.81 9.85 OPM % 17.78 20.33 20.59 -9.01 18.34 6.21 NPM % 13.4 15.95 16.26 -12.13 9.4 1.1 Attaching the AR of the Co. for better insights into the Co.’s working.
Disc: Invested & looking to add.
Posts: 3
Participants: 2