Shreyas Shipping & Logistics - PYT.com

Deven Choksey, KR Choksey Securities

Shreyas Shipping & Logistics is at an inflexion point and transforming itself from shipping to logistics company. We feel the valuations from this level are scalable once its capex in the area of setting up logistic parks are commissioned. We thus opine Strong buy on the scrip. Shreyas Shipping, promoted by Late R. Sivaswamy
and family, is the only container feeder service provider in the country with 7 vessels having total capacity of 4575 TEUs (Twenty Feet Equivalent). The company plans to spend about Rs 350 crore in next 18-24 months in vessel acquisition (Rs 250 crore) and in setting up of logistic parks (Rs 100 crore). The company has set up
Warehousing and logistics facilities at Kandla and an enclosed storage & handling facility at Ahmedabad. It is in the process of setting up similar facilities in North, South and Central India.

These logistic parks will enable it to create a synergy of its existing expertise to land transportation. The Company plans to aggressively expand its multimodal logistics operations which includes, among other things, aggregation, consolidation and segregation of cargo and value addition. This will enable the Company to provide end-to-end solutions to all its clients. More over it would also shield the company's revenue and bottom line from
any slump in the freight rates. We believe the company is at an inflexion point and transforming itself from shipping to logistics company. We feel the valuations from this level are scalable once its capex in the area of setting up logistic parks are commissioned. We thus opine Strong buy on the scrip. Financials and Valuation At
CMP of Rs 156, Shreyas is currently quoting at a PER multiple of 7.8x its Sept'05 ttm earnings. On the basis of EV to Sales and EV to Ebidta basis, the company is quoting at 2.8x and 6.7x its Sept'05 ttm results. On the forward basis, the stock is quoting at an attractive valuation of PER of just 7.1x its FY06 EPS of Rs 21.8.

Courtesy : Sarvar