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Great Eastern Shipping – Initiating Coverage

July 4, 2008

Great Eastern ShippingSBI Caps Securities has initiated coverage on Great Eastern Shipping Co Ltd with a BUY rating. GE Shipping possesses a sizeable fleet with presence in carrying crude oil, products and dry bulk segments. Great Ship India, a subsidiary of GE Shipping is aggressively scaling up its offshore fleet. It plans to expand its fleet size from 3 vessels in FY 2007 to 20 vessels by FY 2010E.

GE Shipping has an exceptional track record in managing its fleet effectively thereby insulating itself from the cyclical business risks. In FY 2008 it has deployed 58 percent of its fleet in spot compared to 55 percent in FY 2007 because of the bullish freight rates in spot. Overall, Shipping industry to balloon as there is a rise in global trade.

The company is expected to report an EPS of Rs 104.40 and Rs 111.92 for FY09 and FY10 respectively. SBI Caps has set a Price target of 493 INR, which averages the price arrived through the EV/EBITDA, P/E, P/BVPS, P/NAV and M.cap/Revenue model for both global average and GE Shipping average.

DalalStreet.Biz Opinion: We are neutral on the stock and advice investors not to rush but ADD / BUY only on corrections.

Related Coverage: ABG Shipyard.

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