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Varun Shipping a market performer: Karvy
Karvy Stock Broking has changed its rating on Varun Shipping Company from buy to market performer with a target price of Rs 62. For Q4FY09, Varun Shipping ltd (VSL) reported revenue decline of 18%YoY (QoQ decline of 30.4%) to Rs 1.85 billion, which was 15% lower than estimates of Rs 2.19 billion.
Karvy Stock Broking has changed its rating on Varun Shipping Company from buy to market performer with a target price of Rs 62 in its May 26, 2009 research report.
"For Q4FY09, Varun Shipping ltd (VSL) reported revenue decline of 18%YoY (QoQ decline of 30.4%) to Rs 1.85 billion, which was 15% lower than our estimates of Rs 2.19 billion.For FY09, revenue increased 7.5% to Rs 9.14 billion and profit declined by 34.5% to Rs 933.6 million. We expect consolidated revenue to increase by 6% to Rs 9.69 billion and profit by 33.9% to Rs 1.25 billion in FY10 mainly due to addition of vessels in offshore sector. At current price of Rs 62, the stock is trading at 7.4xFY2010E and 5.2xFY11E earnings and EV/EBIDTA it is trading at 6.6xFY10E and 5.8xFY11E. The stock is trading at attractive dividend yield of 8.1%. We maintain our valuation at 30% discount to NAV with target price of Rs 62. We are changing our rating from 'BUY' to 'Marketperformer' considering 35% increase in stock price since our last update on 29 April 2009," says Karvy Stock Broking's research report.
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