Angel Securities on GE Shipping - Target Rs 396
Angel Securities is bullish on Great Eastern Shipping and has recommended buy rating on the stock with a target of Rs 396, in itsresearch report.
"Great Eastern 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 Rs 263 per 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 Rs 133 per share. Based on our Target Price of Rs 396 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," says Angel Securities research report.
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