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Buy Varun Shipping Co, target of Rs 105: Karvy
Karvy Stock Broking has maintained its buy rating on Varun Shipping Company with a revised target price of Rs 105. For Q4FY08, Varun Shipping ltd (VSL) reported revenue growth of 18.1% YoY (QoQ decline of 1.8%) to Rs 2.26 billion, lower than research firm's estimates of Rs 2.48 billion.
Karvy Stock Broking has maintained its buy rating on Varun Shipping Company with a revised target price of Rs 105 in its May 15, 2008 research report. "For Q4FY08, Varun Shipping ltd (VSL) reported revenue growth of 18.1% YoY (QoQ decline of 1.8%) to Rs 2.26 billion, lower than our estimates of Rs 2.48 billion. The acquisition of one Very Large Gas Carrier (VLGC) and offshore vessel helped the company report revenue growth. Overall, net profit increased by 26.7% to Rs 413 million translating into EPS of Rs 2.75 as against expectations of Rs 3.2. The Company has accounted loss of Rs 110 million due to exchange loss on foreign currency loans during the quarter."
"At current price of Rs 80, the stock is trading at 6.6xFY2009E and 4.6xFY10 earnings and EV/EBIDTA it is trading at 7xFY09E and 6.2xFY10E. We are revising our valuation from 7xFY09 to 6xFY10 consolidated earnings. We have revised target price from Rs 115 to Rs 105 and maintain Buy," says Karvy's research report.
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