The Hindu Business Line : Varun Shipping dips on rate concern

Lower profits due to dry docking have been cited by some sections as one of the more compelling aspects of Varun Shipping's operations. The company, which has undertaken a large expansion plan during the past 12 months, has lately seen an increase in interest cost and depreciation.

A similar effect in sales (up by 25.5 per cent on y-o-y basis) is not quite discernible due to two reasons, it is felt. One, summer freight rates being normally lower as compared to the peak rates in the winter. Two, the company had undertaken dry docking for two of its LPG ships. Incidentally, PAT for Q1 of fiscal 2007 was down by 12.1 per cent.

The Varun Shipping stock, which closed 2 per cent lower at Rs 76.80 on NSE, is available at about 4.6X fiscal 2007 estimated earnings and 2.4X fiscal 2007 estimated cash earnings. Trading volumes, at over 6 lakh shares, were strong.

Nilanjan Dey

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