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Bharati Shipyard Limited
Thursday, June 14, 2007
Bharati Shipyard receives order from Norway
Bharati Shipyard Ltd (BSL) has bagged an order for two vessels of 150MT bollard pull Anchor Handling Tug and Supply Vessel (AHTSV) from Norwegian Offshore Shipping Ltd, Norway. The Contract value of each vessel is US $ 32.5 million totaling to US $ 65.1 million (i.e. Apprx. Rs 2.60bn). These orders are the largest order for the AHTSVs being placed in India by the European customers.
During the month of May 2007 BSL also received another order from Man Ferrostaal AG of Germany for two latest generation large PSVs. The contract value of each vessel is € 38 million totaling to € 76.00 million (i.e. Apprx Rs 4.18 bn). These vessels are 105 m in length and are fitted with 2 sets of Voith cycloidal Propeller Units at the stern powered by electrical prime mover for diesel Electric Propulsion. Classed with Germanishcher Lloyd, the vessels will have free running speeds of 17 Knots. The vessel would have cargo Deck area of 1400 sq meter and will have capacity of 2500 tons Deck load. With the above orders, the Company’s total order book stands at Rs 37.23bn and it comprises of 41 vessels. BSL is currently sitting on unexecuted order book of Rs30bn, which is equivalent to 5x of our estimated FY08E net sales.
Business Outlook and Valuation –
BSL is a second largest private shipbuilding player in Indian shipbuilding market. BSL has strong order book position of Rs37.23bn (unexecuted portion of Rs30bn), spread over the period FY08E-FY10E. The strong order book position of BSL provides strong earnings visibility and offers us comfort while recommending the stock. BSL’s 75% of the order book is tilted towards offshore segment like AHTS, OSVs and rigs which requires superior quality engineering and delivery skills sets. To ensure the appropriate execution of its healthy order book BSL plans to spend Rs4.5bn on a greenfield shipyard facility located in a SEZ at Mangalore, which is expected to complete by end of FY08. We remain positive on the acquisition of shipyard machinery of Swan Hunter by BSL. The acquisition has given it access to quality equipments and it has reduced the procurement time which would help BSL to execute its order book efficiently in near future.
At current market price of Rs.477, the BSL stock discounts FY08E and FY09E earnings at 13x and 8x. We remain positive on long-term prospects of BSL. We recommend a HOLD with a target price of Rs554 based on DCF method.
Bharati Shipyard Ltd (BSL) has bagged an order for two vessels of 150MT bollard pull Anchor Handling Tug and Supply Vessel (AHTSV) from Norwegian Offshore Shipping Ltd, Norway. The Contract value of each vessel is US $ 32.5 million totaling to US $ 65.1 million (i.e. Apprx. Rs 2.60bn). These orders are the largest order for the AHTSVs being placed in India by the European customers.
During the month of May 2007 BSL also received another order from Man Ferrostaal AG of Germany for two latest generation large PSVs. The contract value of each vessel is € 38 million totaling to € 76.00 million (i.e. Apprx Rs 4.18 bn). These vessels are 105 m in length and are fitted with 2 sets of Voith cycloidal Propeller Units at the stern powered by electrical prime mover for diesel Electric Propulsion. Classed with Germanishcher Lloyd, the vessels will have free running speeds of 17 Knots. The vessel would have cargo Deck area of 1400 sq meter and will have capacity of 2500 tons Deck load. With the above orders, the Company’s total order book stands at Rs 37.23bn and it comprises of 41 vessels. BSL is currently sitting on unexecuted order book of Rs30bn, which is equivalent to 5x of our estimated FY08E net sales.
Business Outlook and Valuation –
BSL is a second largest private shipbuilding player in Indian shipbuilding market. BSL has strong order book position of Rs37.23bn (unexecuted portion of Rs30bn), spread over the period FY08E-FY10E. The strong order book position of BSL provides strong earnings visibility and offers us comfort while recommending the stock. BSL’s 75% of the order book is tilted towards offshore segment like AHTS, OSVs and rigs which requires superior quality engineering and delivery skills sets. To ensure the appropriate execution of its healthy order book BSL plans to spend Rs4.5bn on a greenfield shipyard facility located in a SEZ at Mangalore, which is expected to complete by end of FY08. We remain positive on the acquisition of shipyard machinery of Swan Hunter by BSL. The acquisition has given it access to quality equipments and it has reduced the procurement time which would help BSL to execute its order book efficiently in near future.
At current market price of Rs.477, the BSL stock discounts FY08E and FY09E earnings at 13x and 8x. We remain positive on long-term prospects of BSL. We recommend a HOLD with a target price of Rs554 based on DCF method.
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Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.
