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GE Shipping: Robust profit growth - Views on News from Equitymaster
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  • Feb 1, 2001

    GE Shipping: Robust profit growth

    The Great Eastern Shipping Company has reported a sharp 123% rise in net profit for the third quarter ended 31st December 2000 to Rs 415 m. Though sales declined by 9% to Rs 2,473 m, the company has trimmed its expenses at the operating level, which has resulted in sharp expansion in operating margins from 28% in 3QFY00 to 41% in 3QFY01. But, the decline in sales was primarily on account of nil income from projects (marine construction) in 3QFY01 as against Rs 520 m in 3QFY00. If one were to exclude this item, sales has actually gone up by 12%.

    (Rs m) 3QFY00 3QFY01 Change
    Sales 2,728 2,473 -9.3%
    Other Income 68 75 9.9%
    Expenditure 1,961 1,459 -25.6%
    Operating Profit (EBDIT) 767 1,014 32.3%
    Operating Profit Margin (%) 28.1% 41.0%  
    Interest 160 176 9.4%
    Depreciation 460 503 9.4%
    Profit before Tax 214 410 91.3%
    Other Adjustments 3 44  
    Tax 31 38 23.9%
    Profit after Tax/(Loss) 186 415 123.3%
    Net profit margin (%) 6.8% 16.8%  
    No. of Shares (eoy) (m) 258.8 258.8  
    Diluted number of shares 258.8 258.8  
    Earnings per share* 2.9 6.4  

    One significant aspect to note is that income from charter hire has gone up by 42% to Rs 4,803 m for the first nine months of the current year. During mid 2000, the company managed to charter two of its Aframax carriers (when tanker rates were soaring), as a result of which shipping income has gone by 35% for the first nine months of the current year.

    Other adjustment here denote income from sale of ships, which has gone up from Rs 3 m in 3QFY00 to Rs 44 m in 3QFY01.However, for the first nine months of the current year, income from sale of ships is down by 45% to Rs 234 m. But, if we were to exclude this extraordinary income, net profit has gone up significantly by 184% to Rs 994 m in the first nine months of the current year as opposed to Rs 350 m in the corresponding quarter of the previous year.

    As per the buy-back programme, the company has bought back 27 m equity shares. As a result, paid-up equity share capital stands reduced to Rs 231 m, thus increasing the promoters holding to 16% (14% earlier).

    The stock is trading at Rs 32 at a P/E multiple of 5.1x the annualised nine months earnings.



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    Aug 18, 2017 (Close)


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