SCI (Shipping Corporation of India) is a stable and strong company. SCI has the capacity to carry anything and everything - dry, liquid, liquefied gaseous forms of cargos. It has 77 vessels to its fleet, with a big variety of dry bulk carriers, passenger-cum-cargo vessels, container vessels, VLCC - very large crude carriers, crude oil tankers, product tankers, phosphoric acid and chemical carriers, ammonia& LPG carriers, and offshore supply vessels. It has also diversified into new areas of services.
Taking the past performance, market cap, P/E etc into account, a fair value of SCI should be somewhere near 150-160. At 144, the stock is nearly fully priced. The FPO price band of 135-140 is reasonable, but does not leave much head room for the retail investor in spite of the retail discount. Yes, you may get Rs 10-15 on listing day and the stock also can move back to 170-180 levels after a few months, if crude prices are low (but crude prices will rise by 15-18% in the next 2 months as per my analysis). But then, SCI needs lot of funds for a house hold cleaning job, replace old vehicles with around 25-30 new ones, which will cost a lot of money. Globally, shipping rates are not firming up any more. So if you consider everything, SCI FPO is ok, but may not be as much rewarding to investors as can be expected from an IPO/FPO. Avoid is my judgment.
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