Buy GE Shipping, tgt Rs 515: Karvy

Karvy research has maintained buy rating on GE Shipping with target price of Rs 515 in its July 16, 2008 report. "GE shipping (Standalone) is expected to reported revenue growth of 24.9% YoY (QoQ growth of 7.7%) to Rs 8.09 billion in Q1FY09 on back of strong freight rates despite sale of five vessels. The average spot freight rate for the tanker segment was 132% YoY higher, while Baltic Dry Bulk (BDI) was higher by 64% YoY to 9,797 during the quarter. The company sold three product tanker and two dry bulk vessels during the quarter. At current market price of Rs 363, the stock is trading at 4.3xFY09E and 4.9xFY10E on consolidated earnings of Rs 84 and Rs 74 respectively and 3.4x FY09E and 3.2xFY10E, EV/EBITDA. We maintain our valuation at average of two methods; price to earnings multiple 7x on its earnings of FY10 given and 10% discount to NAV. We maintain our target price of Rs 515 with BUY rating" says Karvy report.