Neutral on Shipping Corporation FPO: Angel Broking
GESCO is a better bet than SCI at current levels, given the former’s higher return ratios, earnings growth.
By ET Bureau |
MUMBAI: Angel Broking has maintained ‘Neutral’ call on the follow-on public offer of Shipping Corporation of India.
“At the lower price band of Rs 135/share, the stock is trading at 0.8x P/BV and 7.2x P/E on FY2012E basis, which is in line with GE Shipping ( GESCO).
We believe GESCO is a better bet than SCI at current levels, given the former’s higher return ratios, earnings growth, relatively younger fleet and exposure to the high-growth offshore segment.
Our fair value for SCI works out to be Rs 143/share (0.8x one-year forward P/BV). Hence, we recommend Neutral on the issue,” the report said.
SCI has come out with an FPO in a price band of Rs 135–140/share to raise Rs 1,143cr–1,186cr through an offer for sale of 42,345,365 shares and a fresh issue of 42,345,365 shares, with 423,454 shares being reserved for eligible employees.
The company plans to to acquire vessels with an estimated cost of Rs 2,664cr, which is likely to be financed by low-cost MIBOR-linked debt of Rs 2,026 crore and the remaining through FPO proceeds and internal accruals.
The issue closes Friday.
“At the lower price band of Rs 135/share, the stock is trading at 0.8x P/BV and 7.2x P/E on FY2012E basis, which is in line with GE Shipping ( GESCO).
We believe GESCO is a better bet than SCI at current levels, given the former’s higher return ratios, earnings growth, relatively younger fleet and exposure to the high-growth offshore segment.
Our fair value for SCI works out to be Rs 143/share (0.8x one-year forward P/BV). Hence, we recommend Neutral on the issue,” the report said.
SCI has come out with an FPO in a price band of Rs 135–140/share to raise Rs 1,143cr–1,186cr through an offer for sale of 42,345,365 shares and a fresh issue of 42,345,365 shares, with 423,454 shares being reserved for eligible employees.
The company plans to to acquire vessels with an estimated cost of Rs 2,664cr, which is likely to be financed by low-cost MIBOR-linked debt of Rs 2,026 crore and the remaining through FPO proceeds and internal accruals.
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The issue closes Friday.
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