Mercator Lines an outperformer: Karvy

Karvy Stock Broking has revised its rating on Mercator Lines from buy to outperformer with a target price of Rs 140 in its May 16, 2008 research report. "Mercator Lines (stand alone) reported revenue growth of 31.0% YoY (QoQ increase of 35.5%) to Rs 2.6 billion due to acquisition of dredgers. The revenue was 30% higher than our estimates of Rs 2.65 billion. EBIDTA margins improved from 33.4% in Q4FY07 to 38.6% in Q4FY08, higher than our expectation of 35.8%. The operating profit increased by 51.4% YoY to Rs 1.02 bn. Depreciation increased by 13% to Rs 273.8 million due to vessel acquisition. Adjusted profit increased by 62.9% YoY to Rs 665 million translating into EPS of Rs 2.8 as against expectations of Rs 1.65."

"We have introduced our FY10 estimates and expect standalone net profit to increase by 10% to Rs 1.26 billion (Previous Rs 1.65 billion) in FY09 and by 26.7% to Rs 1.6 billion in FY10. We expect share of profit from (72.3%) subsidiary in Singapore and offshore rig at Rs 2.24 billion FY09 and Rs 3.27 billion in FY10 in consolidated profits. We have revised our price target from 8xFY09 to 7xFY10 consolidated earnings with target price of Rs 140 (previous Rs 120). We are revising rating from BUY to Outperformer considering recent increase in stock price," says Karvy's research report.

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