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GE Shipping: Money spinning FY01 - Views on News from Equitymaster
 
 
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  • May 3, 2001

    GE Shipping: Money spinning FY01

    The Great Eastern Shipping Company has reported a 100% growth in net profits for the fourth quarter ended 31st March 2001 to Rs 646 m. Sales for the fourth quarter have also gone up by 30% to Rs 3,006 m, which is primarily on account of a 98% rise in freight and demurrage income. However, the sales would have been higher except for a fall in income from project division (the company hived off this unit last year) and marine engineering division.

    (Rs m) 4QFY00 4QFY01 Change FY00 FY01 Change
    Sales 2,313 3,006 29.9% 9,145 10,060 10.0%
    Other Income 139 106 -23.8% 319 391 22.7%
    Expenditure 1,466 1,803 22.9% 6,260 6,073 -3.0%
    Operating Profit (EBDIT) 847 1,203 42.0% 2,884 3,986 38.2%
    Operating Profit Margin (%) 36.6% 40.0%   31.5% 39.6%  
    Interest 178 170 -4.5% 608 717 18.0%
    Depreciation 495 491 -0.8% 1,849 2,005 8.5%
    Profit before Tax 313 648 106.9% 746 1,655 121.7%
    Other Adjustments 49 126 156.8% 482 361 -25.1%
    Tax 40 129 222.9% 160 240 50.0%
    Profit after Tax/(Loss) 322 646 100.2% 1,068 1,775 66.2%
    Net profit margin (%) 13.9% 21.5%   11.7% 17.6%  
    No. of Shares (eoy) (m) 258.8 217.8   258.8 217.8  
    Diluted number of shares 217.8 217.8   217.8 217.8  
    Earnings per share (Rs)       4.9 8.2  

    Net profit for FY01 has increased by 66% to Rs 1,775 m. The growth in net profits would have been higher but for a 38% rise in expenditure. This was primarily on account of a 60% rise in other expenses (buy-back and demerger expenses). However, operating margins have gone up from 32% in FY00 to 40% in FY01 thanks to the higher freight and tanker rates. Extraordinary item here refers to the profit from sale of ships (the company has sold two bulk carriers and one harbour tug vessel in the fourth quarter).

    The company has bought back 42 m shares upto March 2001 out of which 41 m shares have been extinguished, thereby reducing the paid-up capital of the company to Rs 2,179 m. After the year-end, the company further bought back 0.9 m shares and extinguished 1.8 m shares, thereby reducing the paid-up equity share capital further to Rs 2,159 m.

    The Board of Directors have further decided to buy back equity shares, upto Rs 1 bn at a price not exceeding Rs 42 per share from the open market through the stock exchange.

    The stock is trading at Rs 32 at a P/E multiple of 4x the FY01 earnings. The company has declared a dividend of Rs 2.75 per share, which works out to a dividend yield of 8.6%.

     

     

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