Result Update: GE Shipping Company - BUY - TP Rs.500 - Kotak

GESCO has reported moderate set of numbers for Q3FY18 despite improvement in macroeconomic environment, up-trend in shipping cycle and winter in the West. This is primarily due to poor strategy adopted by the company in placing its ships, addition of ships without business, poor bargaining with customers and higher bunker prices (fuel). Sales was reported at Rs 8.3 bn (+11% YoY and +18% QoQ) with improvement in business across segements. The EBIDTA margin has become stable for the company and we expect gradual improvement in EBITDA margins over FY18 to FY20E. Interest cost, depreciation and taxation were in line. Consequently company reported weak PAT of Rs 979 mn vs our strong expectation Rs 2160 mn.

We would like to consider this quarter as an aberration for the company and expect better numbers in FY19, with improving macro economic environment. Maintain BUY with a decreased TP of Rs 500 (from Rs 510) with improving industry dynamics.

Shares of GREAT EASTERN SHIPPING CO.LTD. was last trading in BSE at Rs.390 as compared to the previous close of Rs. 397.8. The total number of shares traded during the day was 3281 in over 134 trades.

The stock hit an intraday high of Rs. 398.45 and intraday low of 388.45. The net turnover during the day was Rs. 1281609.

Source : Equity Bulls

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