Accumulate Shreyas Shipping, says Ashish Chugh

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Accumulate Shreyas Shipping, says Ashish Chugh

Accumulate Shreyas Shipping with a long term view, says Ashish Chugh, Investment Analyst & Author of Hidden Gems.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Ashish Chugh See what other Experts & Brokerages are saying about Shreyas Shippin See messages about Shreyas Shippin

Accumulate Shreyas Shipping with a long term view, says Ashish Chugh, Investment Analyst & Author of Hidden Gems.

Chugh told CNBC-TV18, "The name of Shreyas Shipping, this could be a misnomer because this is not exactly a shipping company, this is more of a logistics company. This company is a part of the Dubai based transport group and I would say this is an ignored stock from the logistics space."

He further added, "This company started with costal shipping a couple of years back but over the years has diversified into various segments in the logistic space including the rail transportation, road transportation and also warehousing. This company has got 100% subsidiary, which is into road transport, rail transport and also warehousing whereas the parent company handles the costal shipping business."

"If we look at the financials of the company, in FY10 this company made a loss of about Rs 15 crore. In FY11 there was a turnaround in the company and the company made revenues of about Rs 190 crore which were up by about 25% over FY10. The company also made a profit after tax of about Rs 12.7 crore. This was against the loss of about Rs 15 crore which it did in FY10."

"Talking about quarter one, sales are up by close to 10% to about Rs 46 crore. There is a small loss of about Rs 1 crore. Reason for the loss in the first quarter is primarily on account of dry docking of one of the vessels which happened because of which there was a revenue loss of close to Rs 6.5 crore. That was the main reason for the loss in first quarter."

"The management has indicated that they are expecting to grow by about 100% in FY12. They are also expanding their businesses in various segments. They have charted a new ship for the costal business and they have also added on trailers and expanding their capacity in the warehousing space."

"Given all these factors I think for a company which is doing a turnover of close to Rs 200 crore and expecting to grow by 100% even if we assume that they grow only by 50%, it will still mean a turnover of close to Rs 300 crore. So Rs 60 crore marketcap for this kind of a company where the profit potential is high and also the growth potential is high, I think the stock is available very cheap close to its 52 week low of about Rs 25-26. The current price is about Rs 27-28. So this is something which can be accumulated by the long term investors given the uncertainty, which is prevailing in the market at this point of time."