CMP: 30.50 January 29, 2016 Stock Details BSE code 537669 BSE ID SIVI Face value ( ) 10 No of shares (m) 6 52 week H/L 49.50/20 Market cap ( m) 175 30 days avg vol (No) 300 Free float ( m) 49 Stock performance (%) 1M 3M 12M Absolute -4.7% -26.1% 22.0% Rel. to Sensex 0.9% 19.6% 36.7% Shareholding Pattern* (%) Promoters FIIs DIIs Others 72.46% % % 27.54% *As of September 2015 Company Overview Shipping Corporation Ltd. (SSCL) an arm of the Laxmipati Group of Companies incorporated in the year 2012. The organization on its berth bagged order of fabrication and erection of Aluminum hull for 07 boats from M/S L&T Hazira.The SSCL has already executed the first boat in a record time. Industry Overview The shipbuilding and repair market in India is poised to pick up momentum with the increasing penetration of Indian ship building companies in the offshore vessels (OSVs) segment. Indian companies have established strong credentials in the building and rep spike in orders for such vessels from the Indian industry. The limited capacities related to OSVs in leading shipbuilding nations such as Japan and South Korea are resulting in diversion of orders to India, driving up the fortune multimodal transportation infrastructure and integrated logistics parks leads to significant logistic outsourcing opportunities. Financial Performance Relative Chart 60 Siddhi Vinayak Shipping Corporation Ltd Sensex 50 40 30 20 10 0 Source: Bloomberg 30,000 29,000 28,000 27,000 26,000 25,000 24,000 23,000 22,000 For the period ending 31 March, 2015, Siddhi Vinayak reported revenues of 29.7 million, representing 48.5% gain when compared to the revenues in FY 14. The company has reported a net profit of 5.8 million in FY 15, when compared to the profit of 0.8 million in FY 14. Table1: Key Financials (Y/e March) 2Q FY15 2Q FY 16 Sales ( m) 11.9 2 29.7 NA NA YoY Growth (%) NA 68.2% 48.5% NA NA EBITDA ( m) 2.6 4.5 13.6 NA NA EBITDA Margin 21.8% 22.8% 45.9% NA NA PAT ( m) 0.3 0.8 5.8 NA NA EPS ( ) 5.4 0.3 1.0 NA NA YoY Growth (%) NA 170.9% 648.0% NA NA Source: Company, Karvy Investment Advisory 1
Background and Business Description Shipping Corporation Ltd. (SSCL) an arm of the Laxmipati Group of Companies incorporated in the year 2012. The organization on its berth bagged order of fabrication and erection of Aluminum hull for 07 boats from M/S L&T Hazira.The SSCL has already executed the first boat in a record time. Key Strengths Government initiatives. Experience in the industry. Risks & Concerns Regulations. High employee / labour attrition rate.. Board of Directors Table 2: Composition of Board Name Mr. Manoj Kumar Sarawagi Mr. Sanjay Kumar Sarawagi Mr. Rakesh Kumar Sarawagi Mrs. Ruchita Amit Mittal Mr. Mahesh Kumar Saboo Mr. Gururaj Kaujalgi Source: Company Relation with Company Executive Director & Chairman Executive Director Executive Director Non- Executive Independent Woman Director Non- Executive Independent Director Non- Executive Independent Director 2
Industry Overview (as per company) The shipbuilding and repair market in India is poised to pick up momentum with the increasing penetration of Indian ship building companies in the offshore vessels (OSVs) segment. Indian companies have established strong credentials in the building and rep spike in orders for such vessels from the Indian industry. The limited capacities related to OSVs in leading shipbuilding nations such as Japan and South Korea are resulting in diversion of orders to India, driving up the fortune multimodal transportation infrastructure and integrated logistics parks leads to significant logistic outsourcing opportunities. The aging fleet of shipping companies in India is another factor energizing prospects for the shipbuilding and repair market in the country. About 40 percent of the India-owned fleet is more than 20 years old, and Indian owners will need to spend about $4 billion to replace these during 2010-2015, notes the analyst of this research service. The future of the Indian shipbuilding and repair market looks promising and is likely to double in size in the next five to six years. The growth potential is further enhanced with the Indian Government aiming for the nation s shipbuilding sector to attain a 5 percent share in the global market by 2017. Ship Repair activity in India is largely concentrated around 18 small sized commercial dry docks, equally divided between the public and private sectors. This is supplemented by wet berths in major ports and captive repair facilities of the Navy. The ship repair business worldwide is estimated to be around $12 billion (appox 55,000 crs). India as a whole gets a revenue of not more than $100 million per annum ( 463 crs) which is less than 1% of world ship repair share. It is estimated that the total potential of the ship repair market available in the Indian region is of the order of 2440 to 2790 crs per annum as shown below. As the repair industry is labour intensive it is easy to translate turnover to jobs which is estimated to be around 20,000 additional jobs in the skilled and semi-skilled category. Competition analysis Company CMP ( ) Mcap ( m) Rev ( m) OPM (%) EPS ( ) PE (x) Siddhi Vinayak Shipping Corporation Ltd. 30.5 175.4 29.7 36.0% 1.0 30.5x Tata Motors Ltd 336.7 9,67,858.7 3,62,947.4 0.7% (14.7) NM Bharati Shipyard Ltd. 25.4 1,275.1 109.6 NM NM NM Source: BSE 3
Financial Analysis For the period ending 31 March, 2015, Siddhi Vinayak reported revenues of 29.7 million, representing 48.5% gain when compared to the revenues in FY 14. The company s EBITDA increased to 13.6 million in FY 15 from 4.5 million in FY 14, primarily attributable to increase in revenues. Profitability ratios were at very comfortable levels with return on equity and return on capital employed at 5% and 11% respectively in FY 15. Year end March Income statement ( million) Revenue 11.9 2 29.7 % growth NA 68.2% 48.5% EBITDA 2.6 4.5 13.6 % EBITDA margin 22% 23% 46% Depreciation and Amortisation 0.4 0.8 1.4 EBIT 2.2 3.7 12.2 Interest 0.2 1.6 1.4 PBT 0.8 1.4 7.9 Tax (credit) expense 0.5 0.6 2.1 Net profit 0.3 0.8 5.8 % growth net profit NA 170.9% 648.0% Balance sheet ( million) Shareholder fund 12.4 99.7 105.5 Long term liabilities 5.3 6.2 4.4 Current liabilities 99.6 147.5 146.0 Fixed assets 129.0 137.0 136.4 Current assets 135.3 5.4 8.9 Cash & cash equivalents 0.5 5.1 0.8 Cash flow statement Cash flow operations 0.3 3.2 7.6 Cash flow from investing () () () Cash flow from financing 128.9 10.3 (11.2) Per share data EPS ( ) 5.43 0.3 1.0 CEPS ( ) 0.1 0.6 1.3 DPS ( ) NA NA NA BVPS ( ) 2.2 17.3 18.3 Financial Ratios % ROE 2% 1% 5% ROCE 12.5% 3.5% 11.1% Debt/Equity 0.4 0.1 Interest coverage ratio 12.0 2.4 8.6 Current ratio 1.4 0.1 Cash ratio Source: Company, Karvy Investment Advisory 4
Financial Snapshot Revenue growth (%) EBITDA margin (%) 3 3 2 2 1 1 8% 6% 4% 2% % 1 1 5% 4% 3% 2% 1% % Revenue ( m) % growth EBITDA ( m) % EBITDA margin 8.0 6.0 4.0 2.0 Net Profit Margin (%) 2% 2% 1% 1% % % 2 1 1 BVPS & EPS Book value per share ( ) 6.0 4.0 3.0 2.0 1.0 Net Profit ( m) % net profit margin EPS diluted ( ) Liquidity ratios Profitability ratios 1.50 4 1% 1.00 3 1% 2 0.50 1 % 0 0 % Current ratio Cash ratio ROE ROCE Source: Karvy Investment Advisory 5
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