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Shipping Corporation of India – SELL / Exit

August 9, 2007

Citigroup research has terminated coverage on Shipping Corporation of India Limited due to lack of investor interest in the stock.

Given global shipping team’s expectations of a stablisation in charter rates over 2007 / 10E in the tanker and the dry bulk segments, we expect SCI’s earnings to decline moderately over FY07-10E.

Final recommendation for the security is Sell/Medium Risk (3M) with a target price of Rs 171. Target price for SCI is calculated by using simple average of the long-term P/BV and the current NAV. Fair-value NAV/share is Rs204. SCI’s long-term average P/BV is 0.68x. The share price trades within a fairly steady band of +/-1 standard deviations. At an FY08E P/BV of 0.68x, the fair value is Rs138. SCI’s EPS is expected to fall to Rs 30.09 and Rs 27.46 for FY 08 and FY 09 respectively.

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