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SCI: The clear winner - Views on News from Equitymaster
 
 
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  • May 2, 2001

    SCI: The clear winner

    The Shipping Corporation of India (SCI), the government owned shipping major, has reported a 149% growth in net profits to Rs 4,016 m for the year ended 31st March 2001. The buoyant tanker rates, which touched its decades high in the second half of the current year, have helped the company in improving its per voyage realisations as well as the operating margins.

    (Rs m) 4QFY00 4QFY01 Change FY00 FY01 Change
    Sales 6,959 8,520 22.4% 25,428 30,555 20.2%
    Other Income 341 656 92.1% 720 1,534 113.1%
    Expenditure 5,036 5,625 11.7% 20,649 22,985 11.3%
    Operating Profit (EBDIT) 1,924 2,895 50.5% 4,779 7,570 58.4%
    Operating Profit Margin (%) 27.6% 34.0% 18.8% 24.8%
    Interest 320 163 -49.2% 724 781 7.8%
    Depreciation 659 574 -13.0% 2,748 2,537 -7.7%
    Profit before Tax 1,286 2,814 118.9% 2,026 5,786 185.5%
    Tax 195 1,120 474.4% 410 1,770 331.5%
    Profit after Tax/(Loss) 1,091 1,694 55.3% 1,616 4,016 148.5%
    Net profit margin (%) 15.7% 19.9% 6.4% 13.1%
    No. of Shares (eoy) (m) 282.3 282.3 282.3 282.3
    Diluted number of shares 282.3 282.3 282.3 282.3
    Earnings per share (Rs) 5.7 14.2

    The topline growth in the current quarter is even more impressive recording a sharp 22% growth in the fourth quarter to Rs 8,520 m. Though the company failed the take advantage of the improving tanker rates in the first quarter (sales declined by 5%), new charters with some of the Indian oil companies in the second quarter boosted topline growth in the subsequent quarters.

    Operating margins have also gone up from 19% in FY00 to 25% in the current year. Though higher freight rates is one of the reasons, the company has also managed to cut back its expenses in the current year. Operating expenses as a percentage of sales has come down from 81% in FY00 to 75% in FY01.

    It has been a memorable year for SCI. The company has emerged as the winner of the Petronet LNG transportation contract, which is estimated to be worth US$ 400 m. The other two companies in the SCI-Mitsui consortium include Kawasaki Shipping and NYK. Petronet LNG, which proposes to have two terminals at Dahej and Kochi, would require four LNG vessels for moving 7.5 million metric tonnes of LNG annually. Apart from this, SCI has the Dabhol Power's LNG transportation contract also. These venture is likely to be the key driver for the company in the coming years.

    The scrip is currently trading at Rs 37 at a P/E multiple of 2.6x the FY01 earnings.

     

     

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