Seven Islands Shipping Ltd IPO
Seven Islands Shipping has filed its papers with SEBI to raise Rs. 600 crores via initial public offering (IPO) of equity shares. The public issue com...
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Last Updated: 30 August 2022 5:02 PM by 5Paisa
IPO Synopsis
Seven Islands Shipping has filed its papers with SEBI to raise Rs. 600 crores via initial public offering (IPO) of equity shares.
The public issue comprises of fresh issue worth Rs. 400 crores and an offer for sale aggregating up to Rs. 200 crores. For offer for sale, up to will be raised by FIH Mauritius Investment will raise up to Rs 100 crore, Thomas Wilfred Pinto up to Rs 85.64 crores, and Leena Metylda Pinto up to Rs 14.35 crores.
JM Financial Limited and IIFL Securities Ltd are book running lead managers to the issue.
Objective of the Issue
The net proceeds raised from fresh issue are to be utilised:
• to acquire one very large crude carrier vessel and one medium range vessel from the secondary market at an estimated cost of ₹352 crore
• to fulfil general corporate purchases
Headquartered in Mumbai, Seven Islands Shipping Limited is the third largest seaborne logistics company that was incorporated in 2002. The company is engaged in the trading of white oils, black oils, lube oil and liquid chemicals are transported in product vessels classified as Small vessels, Medium Range or MR vessels and Long Range or LR vessels. It transports oil products classified as black oils such as fuel oil and light diesel oil, and white oils such as naphtha, high speed diesel, superior kerosene oil and gasoline and lube oils, primarily along the Indian coast, that are used in end markets. It transports crude oil primarily from the Arabian gulf countries to Indian refineries along the Indian coasts. A few of the primary priorities of this company include secure transportation, efficiency while maintaining a clean environment.
Seven Islands transports crude oil in vessels that are categorized as Suezmax, Aframax and VLCCs. The company operates 20 vessels in total, which includes 13 MR vessels, 4 small vessels, while the rest are Suezmax vessels. M.T. Saffron and M.T. Crimson were the first two vessels that were bought in 2016.
In 2018, 2019 and 2020, the total amount of crude oil imported by Indian oil companies was 220 MMT, 226 MMT and 227 MMT. India has one of the fastest growing oil import rates and the company is well capitalized to meet the demands as it operates primarily along the Indian coast transporting oil products and internationally transporting crude oil. The demand for oil tanker vessels to import and transport crude oil and oil products has been steadily increasing, mitigating business deployment risk for oil tankers in India in comparison with other countries.
Certain of key customers include Indian Oil Corporation Limited and Bharat Petroleum Corporation Limited.
| Particulars (in Rs. Crores) | FY20 | FY19 | FY18 |
|---|---|---|---|
| Revenue | 711.0 | 467.6 | 412.6 |
| EBITDA | 272.1 | 167.3 | 209.2 |
| PAT | 80.3 | 38.8 | 88.0 |
| Particulars (in Rs. Crores) | FY20 | FY19 | FY18 |
|---|---|---|---|
| Total Assets | 1655.3 | 1226.0 | 935.7 |
| Share Capital | 57.2 | 57.2 | 47.7 |
| Total Borrowings | 729.2 | 466.6 | 412.2 |
| Particulars (in Rs. Crores) | FY20 | FY19 | FY18 |
|---|---|---|---|
| Net cash generated from / (used in) operating activities | 268.0 | 181.7 | 169.7 |
| Net cash from / (used in) investing activities | -604.8 | -177.3 | -174.7 |
| Net cash flow from / (used in) financing activities | 182.8 | 200.4 | -34.6 |
| Net increase (decrease) in cash and cash equivalents | -154.0 | 204.8 | -39.6 |
Peer Comparison
| Name of the company | Total Revenue (in Rs. crores) | Basic EPS | NAV Rs. per share | PE | RoNW % |
|---|---|---|---|---|---|
| Seven Islands Shipping Limited | 711.03 | 14.03 | 139.96 | NA | 10.60% |
| The Shipping Corporation of India Limited | 4,425.44 | 7.2 | 162.01 | 12.12 | 4.50% |
| The Great Eastern Shipping Company Limited | 3,686.73 | 13.9 | 462.39 | 18.48 | 3.00% |
| VRL Logistics Limited | 2,118.54 | 10 | 68.28 | 22.92 | 14.60% |
| Transport Corporation of India Limited | 2,717.84 | 18.5 | 133.27 | 13.45 | 14.00% |
| Blue Dart Express Limited | 3,175.13 | -17.6 | 206.86 | -260.9 | -8.50% |
| TCI Express Limited | 1,031.96 | 23.2 | 87.93 | 41.58 | 26.40% |
Strengths
- Proven ability to acquire vessels at optimal price and deploy vessels
- Longstanding relationship with major Indian oil and gas customers
- Quality in-house management of operations and cost competitive vessel management
- Sizeable and diverse India flagged and owned operating fleet
- Consistent financial performance and Ability to retain advantage of tax regime
Risks
- Certain legal proceedings initiated against the company, one of the individual promoters, and directors
- The liquid seaborne logistics industry is volatile and sensitive to upturn and downturn changes in general economic condition
- Under utilisation of the largest vessels could affect the business as revenue from a vessel is directly proportional to the size of the vessel
- Fluctuations in global seaborne transportation and global demand for seaborne transportation may cause freight rates to shift unpredictably
- Improper storage, processing and handling of oil products may cause damage to the vessel, in turn, affecting the operations
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