Introduction
Initial public offerings (IPOs) have become a popular method of raising capital for companies across a wide range of industries. New to the list is Seven Islands Shipping Ltd., a company that received the green light from SEBI for its IPO.
While the specific date for the Seven Island Shipping Ltd IPO is yet to come out, current indications suggest that the company will soon launch its IPO. Let's see whether this IPO merits your attention as a potential investor.
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About the Company
Seven Island Shipping Ltd is one of India's premier seaborne logistics firm established in 2002. Registered under the Directorate General of Shipping, the company owned 20 liquid cargo vessels as of January 31, 2021. Along with trading in liquid products, the company also has a business in crude oil logistics. The total deadweight capacity of its 20 liquid vessels stood at over 10 lakhs MT as of January 31, 2021.
Now that you know about the company, let's understand some of its strengths and weaknesses.
Strengths
- Demonstrated expertise in acquiring vessels at favourable prices and effectively deploying them
- Established and enduring partnerships with prominent Indian oil and gas clients
- Effective internal operations management and competitively priced vessel management services
- Extensive and diverse array of India-flagged and owned vessels
- Steady and reliable financial performance
- Sustaining the benefits offered by the tax regime
Weaknesses
- There are ongoing legal proceedings against the company, its promoters, and its directors.
- The liquid seaborne logistics industry exhibits volatility, being highly responsive to fluctuations in overall economic conditions.
- Contracts with PSU customers bolster its revenue to a significant extent.
- Vessel's size has a direct impact on revenues.
- The company engages in time charters with a duration of one year.
Financial Snapshot
As of December 2020, Seven Islands Shipping exhibited a robust financial standing. Its total equity reached Rs. 57 crores. The company's net worth stood at an impressive Rs. 920 crores. Additionally, the total borrowings amounted to Rs. 813 crores. It indicates the company uses external funds to support its growth plans.
The company achieved significant revenue from operations, amounting to Rs. 655 crores for operational performance. This revenue shows the company's ability to generate considerable income through its core activities. Furthermore, the profits after tax stood at Rs. 119 crores. It reflects the company's effective management of costs and expenses.
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Here's the financial snapshot as per the draft red herring prospectus:
|
Particulars
|
As of and For FY Ending March 31 |
| 2020 |
2019 |
2018 |
| Total Equity |
57 |
57 |
48 |
| Net Worth |
801 |
721 |
485 |
| Total Borrowings |
729 |
467 |
412 |
| Revenue From Operations |
711 |
468 |
413 |
| Profit After Tax |
80 |
39 |
88 |
*Amount in Crores
IPO Details
The company will offer its IPO shares at a face value of Rs. 10 per share, aggregating to Rs. 600 crores. While Rs. 400 crores will be available via fresh issue, an offer of sale amounting to Rs. 200 crores will be available. 50% of the offer will be for Qualified Institutional Buyers (QIBs), 35% for retail investors, and 15% for non-institutional investors (NIBs).
With the money raised, Seven Island Shipping Ltd aims to:
- Acquire one VLCC vessel
- Obtain one medium-range vessel from the secondary market
- Utilize the funds for various corporate initiatives and objectives
Things to consider before buying
When evaluating an IPO, you must consider several factors to make an informed investment decision. Seven Islands Shipping has demonstrated its ability to provide robust financial services. This has made it a trusted name in the industry. The company's success is because of its skilled and efficient management team. Its expertise has been instrumental in achieving outstanding results.
The management team at Seven Islands Shipping boasts extensive experience in the shipping and logistics sector. It enables them to navigate the complex financial landscape with ease. Their deep understanding of market dynamics, risk management strategies, and industry best practices has positioned the company as a reliable partner for its clients.
Considering the ongoing and steady rise in the demand for vessels dedicated to the transportation and importation of crude oil, it becomes evident that Seven Islands Shipping Ltd possesses immense growth potential. With the increasing need for efficient and reliable means of transporting crude oil, Seven Islands Shipping Ltd stands to benefit significantly from this upward trend.
Given these favorable market conditions and the company's strong growth prospects, you can consider subscribing to Seven Islands Shipping's initial public offering (IPO). Participating in the IPO would allow you to become an early stakeholder in a company with promising potential for future success. If you need a Demat and trading account for investing, you can turn to Motilal Oswal.
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