- Net Profit: Highest ever reported net profit of INR2,614 crore, consolidated.
- Net Asset Value (NAV) per Share: Consolidated NAV moved up to about INR1,400 per share as of March 2024.
- Dividend: Fourth interim dividend of INR10.80 per share, taking the total dividend for FY24 to INR36.30 per share, including a special dividend of INR7.50 per share.
- Standalone Net Profit: Highest ever quarter with a net profit of INR701 crore.
- Consolidated Net Profit: Best quarter at INR851 crore net profit.
- Standalone NAV per Share: Increased from INR962 per share in March '23 to INR1,127 per share in March '24.
- Cash Profit Contribution: INR190 per share from cash profit (PAT plus depreciation).
- Dividend Payout: Paid out INR35 in dividends during the year.
- Five-Year NAV CAGR: 25% CAGR from March '19 to March '24.
- Consolidated NAV Increase: INR226 per share from cash profit and INR41 per share from fleet value improvements on the offshore side.
- Crude Tankers: Marginally better in FY24 than in FY23.
- Product Tankers: Slightly worse but still profitable.
- LPG Carriers: Better performance due to repricing of contracts.
- Dry Bulk: Significantly weaker in FY24 versus FY23.
- Asset Prices: Firmed up 10% to 15% in line with earnings growth.
- Order Book: LPG order book at about 20%, asset prices at all-time high levels.
- Fleet Supply: Low scrapping levels, average scrapping percentage around 1.5% over the last five to six years.
- Debt Reduction: Reduced debt significantly, currently holding about $350 million of net cash.
- CSR Impact: Partnered with 49 NGOs, benefiting over 1.5 lakh students, 120,000 women and children, and providing livelihood for around 42,000 women.
Release Date: May 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Great Eastern Shipping Co Ltd (BOM:500620, Financial) reported its highest ever net profit of INR2,614 crore for FY24.
- The company declared a fourth interim dividend of INR10.80 per share, bringing the total dividend for FY24 to INR36.30 per share.
- The consolidated NAV per share increased from INR1,160 to INR1,400, reflecting strong financial health.
- Crude tankers, product tankers, and LPG carriers performed significantly better in Q4 FY24 compared to Q3 FY24.
- The company is net cash positive on both standalone and consolidated levels, indicating strong liquidity.
Negative Points
- Dry bulk rates were lower in Q4 FY24 compared to the October-December quarter, impacting overall performance.
- The order book for LPG carriers is high at 20%, which could lead to potential overcapacity in the future.
- Saudi Aramco's reduction in production targets has led to a drop in utilization for jack-up rigs, creating uncertainty in the offshore market.
- The cancellation of a tender for the rig Greatdrill Chetna could impact future revenue streams.
- The company continues to trade at a significant discount to its consolidated NAV, indicating potential undervaluation by the market.
Q & A Highlights
Q: Your maximum fleet is in product carriers and dry bulk carriers. What is the reason for this positioning, especially when LPG trade has been growing significantly?
A: It is not a conscious strategy. We are agnostic to the sector we invest in. LPG has been profitable, but so have product tankers. We are a small proportion of the global fleet, so market growth doesn't significantly impact our investment decisions. We focus on relative pricing and diversification across sectors.
Q: Going forward, will you have any affinity for a particular sector when investing in new ships?
A: No, we have no particular affinity to one sector over another. We will always look at relative pricing and where we can obtain ships. Diversification across various sectors is important as different markets perform well at different times.
Q: What are your plans for the 12 vessels coming up for repricing, especially with one tender being canceled?
A: The vessels coming up for repricing have been bid into businesses and are likely to get their next contracts at higher rates. The tender cancellation affects one rig, and we are evaluating our options for it.
Q: What constitutes the other income of INR163 crore?
A: A large part of it is treasury income due to significant cash balances generated from strong market conditions.
Q: Can you explain the significance of the order book versus scrapping potential chart?
A: The chart shows the potential for fleet reduction through scrapping. For crude tankers, a high percentage of the fleet is old and may be scrapped if market conditions weaken. For LPG carriers, the order book is high, and the fleet is relatively young, so fewer vessels are likely to be scrapped.
Q: Are you seeing any impact on the offshore vessel market due to Saudi Aramco's changes in capacity?
A: Currently, there is no major impact on offshore vessels. The demand for offshore vessels remains strong globally, and they are well-employed across various markets.
Q: What is the extent of repricing for the 12 vessels coming up in the first half of FY25?
A: We don't disclose specific rates, but the earning rates for new contracts are between 50% and 100% higher than current rates.
Q: What is the incremental EBITDA addition for Greatship in the recent quarter?
A: The impact of repricing contracts added $8 million to $10 million in additional EBITDA year-on-year for Q4.
Q: How are the rates for the first two months of the current financial year compared to Q4 averages?
A: Product tanker rates are marginally stronger, crude tanker rates are slightly weaker, and bulk rates have been getting stronger, especially for smaller vessels.
Q: How does Saudi Aramco's de-hiring of rigs impact the rig market?
A: It may reduce utilization slightly but is unlikely to cause a significant glut. The jack-up rig market remains tight, and other oil majors still show interest in contracting rigs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
