The Hindu Business Line : Garware Offshore at new peak

Garware Offshore has been steaming ahead on the bourses on strong revenue growth and operational momentum. The stock, after creating a 52-week high at Rs 171 on Thursday, lowered its anchor at Rs 167, up over 3 per cent, with over one lakh shares changing hands on the BSE alone. In the last one month, it has gained over 52 per cent.

Mixed picture

According to analysts, increase in oil exploration activity, particularly at home, and higher lease rental income generation from support vessels have boosted the profitability and cash flow for the company.

However, according to an analyst with Darashaw Equity Research, the increase in finance costs, coupled with burden (tax and depreciation) of assets capitalisation may weigh against the balance-sheet for this December ending company for about next couple of years.

Mr Aditya A. Garware, Vice-Chairman and Managing Director of the company, told Business Line that the company was toying with several options for keeping the debt-equity ratio at the current level of 1.6:1. He indicated that the company is also attempting to stem further dilution of paid-up capital, which is at Rs 18.5 crore now after the recent conversion of warrants. "At the end of December 2007, it will, however, go up to Rs 23 crore owing to conversion of another batch of warrants," Mr Garware said.

Promoters now hold around 33 per cent and FIIs hold around 15 per cent — India Star Mauritius' being the biggest overseas funds with a stake of 14.01 per cent.

Meanwhile, Garware has become the agent for Havyard Leirvik AS of Norway in November for supply of vessels and designs to Indian shipping companies and shipyards. It has already submitted bid, on behalf of Havyard, with ONGC for construction of 28 offshore vessels. The commission - ranging between 2 and 5 per cent - will be a new revenue stream for Garware.