Thanks for sharing. Can you touch a bit on valuation? Also, can you explain a bit more on the scenario if oil stays <50$
See i am not a valuation expert and i deliberately did not included in the article valuation column, due to the fact that there are numerous possibilities in the company, because there are various green shoots.
- conversion of operational profitability into cashflow, well its not the best , but it is better.
- management is not expanding after IPO aggressively, but it is a calculated move, the strategy is they sense the contract for charter and accordingly they include the vessel in the portfolio. Coming to your core part that is valuation, first of all its not conclusive for the fact that it is just a small company, however there are various triggers of expansion of valuation such as shifting from SM segment to mainboard from FY-27, management is doing quite well on the operational front so and expansion which lead by QIP would enable value creation. Often i view QIP as a negative, however the positive news is they maintain the discipline of conservative expansion and what i believe is they will do QIP at a higher rate after shifting to mainboard that’s how i think and feel. Now i have prepared certain scenario wise valuation. i had also considered SEAMAC and GESHIP likewise scenario.
| Scenario | P/B Range (Indian Marine Cos) | Book Value (₹109) | Implied Price |
|---|---|---|---|
| Distress / panic bottom | 0.5–0.8x | ₹ 109 | ₹55–87 |
| Fair value / mild macro concern | 0.9–1.3x | ₹ 109 | ₹98–142 |
| Current price (CMP ₹164) | 1.47x | ₹ 109 | ₹164 — BOTTOM of geopolitical range |
| War / geopolitical premium (SEAMEC today) | 1.5–2.5x | ₹ 109 | ₹164–272 |
| Full peer re-rating (NSE mainboard) | 2.5–3.0x | ₹ 109 | ₹272–327 |
| Super cycle (GE Shipping 2008 peak) | 3.5–4.0x | ₹ 109 | ₹381–436 |
Since its asset Heavy I would put a little weight on PE terms. however , why i had put PE valuation framework is due to increase in earnings in the upcoming period.
| Scenario | FY27E EPS | PE Multiple | Target Price | Return from CMP | Conditions |
|---|---|---|---|---|---|
| Bear case | ₹ 24 | 8x | ₹ 192 | 18% | AHTS idle |
| Base case (most likely) | ₹35–38 | 11–12x | ₹385–456 | +136–180% | AHTS chartered |
| Bull case | ₹42–48 | 13–15x | ₹546–720 | +235–341% | 2nd WSV charter |
Regarding OIL thesis , what i think is it is highly unlikely that oil will go below 50$. if it goes it will be worst case scenario and i am not seeing that coming.
Disclaimer - This is not a financial advice , and it is purely an educational purpose.
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My first reply had been deleted , anyone wandering which company i am talking about then its ABS MARINE
@Umang_Adatia Please check your message inbox , it was deleted as your post was flagged for self-promotion, your post was purely promotional.
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Hey, awesome analysis @Umang_Adatia
What do you think about ABS MARINE and GESHIP now? Has your thesis grown stronger with recent escalation? I am newbie and was thinking of researching both but not sure how to look at them now with this much uncertainity?
Thanks for acknowledgement, however, my thesis hadn’t changed much, The right question to ask is what worked in the favour of the company? If you check the freight rates , they shoot up like there is no tomorrow and at the same time they onboarded New vessel plus green shots from ONGC tenders, because a company like ONGC 's capex is feasible when there is rising oil price scenario. so there are lot of factors , however if you go through recent concall management was a bit conservative and guided 10% on topline and on the earnings front. I would watch this stock not from a sector specific but i would see from a company specific, the good thing about the company is they are able to maintain margins followed by meaningful operating cashflow, the next triggerpoint is leverage , company had already leveraged enough and it is also comfortable position as per my understanding. however don’t get excited by the share prices as i am nobody to advise, instead keep watching about next moves by the management through future concalls , and yes since its a microcap, it carries a lot of volatility.
Note - this is not a financial advise and its purely for educational purpose.