Indian shipping companies are expected to post a marginal top line growth on a yearly basis for Q1. Sequentially, this figure might look flat or down.
Charter rates for tankers have remained firm in the quarter owing to the phasing out of single hull tankers. Dry bulk carriers have little to cheer about owing to excess supply and plunging Baltic Dry Index .
?Revenues of shipping companies in the first quarter will see an improvement of about 6-7% on a yearly basis. This, on a sequential basis, will see a decline of 10-12% due to the pressure on freight rates and excess supply of vessels in the market,? said Kapil Yadav, analyst, Dolat Capital. Crisil Research expects operating margins to remain at 25-30%. Revenues and profitability are likely to remain flat .
The numbers would look better on a yearly basis as during the June 2009 quarter, the entire economy was in the doldrums and things have improved from then on. However, BDI, which is the measure of freight rates for dry bulk, has been slipping down for the past one month, and is likely to impact revenues of these shipping companies.
Analysts have a positive outlook for the tanker segment because of increased oil storage and scrapping of single hull tankers. ?Dry bulkers may show around 10-15% correction in the short term on the back of trade activities happening in China. Offshore assets will continue to be in sync with oil prices, but largely range bound,? said Jyotsna Sawdekar, senior analyst, Jaypee Research.
The tanker market has seen a good upward trend this quarter. ?Mercator Lines has 80% of its vessels on long term charters which will lead to a decent revenue growth in this quarter. Utilization levels for the company have improved in the dredging segment due to lower dry docking expense which will be positive on its results,? said Yadav.