Shreeji Shipping Global Ltd. (Subscribe)

Highlights

Shreeji Shipping Global Limited (SSGL), incorporated on 1995, provides shipping and logistic solution for dry bulk cargo at various Ports and Jetties at India and Sri Lanka with fleet of more than 80 vessels (consisting of barges, mini bulk carriers (MBCs), tug boats and floating cranes) and 370+ earthmoving equipment (consisting of material handling machines, excavators, pay loaders, tippers including trailers, tankers and other vehicles).

SSGL business is based on B2B business model where they provide (i) Cargo Handling (ii) Transportation (iii) Fleet chartering and equipment rental (iv) other operational activities at various major ports, non-major ports and jetties, particularly along the West Coast of India. They primarily cater customers in various sectors including Oil and Gas, Energy and Power, Fast Moving Consumer Goods (FMCG), Coal and Metal Industry.

Out of the total proceeds of Rs. 4,107 mn, ~Rs. 2,512 mn would go towards acquisition of dry bulk carriers in Supramax category in the secondary market, ~230 mn would be utilized for repayment of certain borrowings availed by the company and ~Rs 1,365 mn would go towards general corporate purpose.

Key Highlights

• The cargo handled at ports in India is expected to grow at a CAGR of 10.80 pct from 1,540 MMTs of cargo in FY24 and to 2,849 MMTs in FY30. Further, total cargo handled by ports situated in Gujarat is expected to increase from 317.20 MMTs in FY24 to 720 MMTs in FY30, representing CAGR of 17.50 pct.
• SSGL integrated service model provides them with greater business opportunities from their customers involving wide range of services, contributing to revenue and profitability and helps them to deliver their solutions to customers engaged across various industries.
• Their cargo handling business, which is their largest business operation, can be categorised into the following: (i) STS (Ship-to-Ship) Lightering services; (ii) Stevedoring services; and (iii) Other port services including cargo management services.
• The company also offer onboard stevedoring services. Onboard stevedoring refers to the process of cargo handling, loading, and unloading directly on a ship while it is still at sea. Onboard stevedoring plays a key role in the shipping industry, mainly for dry bulk cargo.
• SSGL’s key growth strategies include (i) Continued focus on cost optimization and improving operational efficiency (ii) Continue to invest in fleet and earthmoving equipment (iii) Focus on expansion of business operations from land to port to capitalize on industry opportunities (iv) Acquire new customers and expand into new sectors.
• In FY25 sales of the company stood at Rs. 6,076 mn, fell 16.88 pct YoY due to one of the top 10 clients reduced dependence on company’s cargo. EBITDA of the company grew 1.4 pct YoY to Rs. 2,007 mn while margins expanded 600 bps YoY to 33 pct.  During FY25 the company posted profit of Rs. 1,412 mn, rose 13.43 pct YoY.

Key Risk

• The company might face client concentration risk as single customer contributes 1/5^th of total sales. Loss of this customer can materially impact company’s profitability.
• There may be delays or defaults in payment by customers or the tightening of payment periods by third party service providers which could negatively affect SSGL’s cash flows.
• SSGL is significantly dependent on particular dry bulk commodities such as coal, pet coke and sulphur. Any change in regulations or demand of such commodities may significantly affect their operations.

Financial Performance

Valuation

Shreeji Shipping Global Limited (SSGL), provides comprehensive shipping and logistics services and operate at ports across India and internationally, equipped with advanced infrastructure. At the upper end of the price band of Rs. 252, the issue is priced at a PE of 29.07x its FY25 earnings on post issue equity capital. One can subscribe this issue.

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