Bharati Shipyard a market outperformer: FIRST GLOBAL

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Bharati Shipyard a market outperformer: FIRST GLOBAL

FIRST GLOBAL India Research has maintained an outperformer rating on Bharati Shipyard in its report of january 30, 2008.

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FIRST GLOBAL India Research has maintained an outperformer rating on Bharati Shipyard in its report of january 30, 2008. " Bharati Shipyard Ltd. (BHSL.IN/BHAR.BO) threw up a couple of positive surprises in Q3 FY08 by announcing the commencement of a new shipyard at Dabhol in the quarter, ahead of its earlier known new shipyard at Mangalore, which will also commence production in FY09. Both the Dabhol and Mangalore shipyards will be fully commissioned with dry-docks and jetty in FY10. Most of the company's revenue growth in FY09 will come from the manufacture of jack-up rigs for Great Offshore at Dabhol. The company bagged two large orders for offshore vessels from the Shipping Corporation of India and Opielok Bereederungs in Q3 FY08. The company has announced an investment of Rs.1.25 bn for a 50% equity stake in a new shipyard on the West Bengal coast with the Apeejay Group. The West Bengal shipyard will manufacture ships of 100,000-250,000 dwt in size and will be set up at a total Capex of Rs.15-20 billion. Bharati has transformed into a larger player, with stakes not just in offshore vessels, but also in rigs and medium sized tankers and dry bulk vessels. However, going forward, the company will have to face increasing competition from other shipyards worldwide, as well as cyclical movements in the shipping industry. The stock currently trades at an FY09E P/E of 15.6x and a FY09E EV/EBIDTA of 4.1x. We reiterate Outperform on Bharati Shipyard, according to FIRST GLOBAL's report.

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