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GE Shipping Research Report - 16th Dec 2015

Published on Apr 28th 2010

IT

GE Shipping (Gesco) has emerged almost unscathed from the downturn of the shipping cycle on account of timely purchase and sale of assets and sound mix of time spot ratio. Accordingly, with the bottoming out of the freight rates and asset prices, we expect Gesco to register 49.3% CAGR in Net Profit over CY2010-12E. Further, the company plans to list its wholly-owned offshore subsidiary, Greatship Limited (GIL) by end FY2011E, which we believe will unlock value for the shareholders. On NAV basis, the Shipping business fetches Rs263/share (10% discount to NAV), while we have valued the Offshore business at 6.5x FY2012E EV/EBIDTA in line with its global peers and fetches Rs133/share. Based on our Target Price of Rs396 the implied EV/ EBITDA, P/BV, P/E multiple works out to 5.7x, 0.9x, and 5.7x respectively, on FY2012E basis. Thus, on account of trading at a significant discount to its global peers, we recommend a Buy on stock.

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