Sci P/E Languishes At 2.48x Despite Rs 655 Crore Profit

The Shipping Corporation of India (SCI) generated a cash of profit of Rs 655 crore last year. In comparison, market favourite and software giant Wipro generated a cash profit of Rs 764.20 crore and top software exporters Infosys Technologies returned a cash profit of Rs 736.22 crore at the end of the year.

While the Wipro stock is available at a price-to-earning (P/E) multiple of 45.63 times, and Infosys at 38.47 times trailing 12-month earnings, the immensely profit making and dividend paying Shipping Corporation of India languishes at a P/E multiple of 2.48 times.

Industry sources said shipping is not a very "attractive industry" for the markets as it requires deeper understanding of the international freight markets. Also, not a single brokerage house employs analysts tracking the shipping industry. "As a result, a profit making and robust industry is lost on the market radars," a source said.

The Shipping Corporation is also dragged down by the public sector undertaking (PSU) tag, market sources said.

Indeed, market sources pointed out that Hughes Software and Digital Equipment -- which generate one-tenths of SCI's cash profits are traded at P/Es nearly 13 times that of SCI.

SCI announced phenomenal results for the first quarter of 2001-02, with net profit jumping 488 per cent over the corresponding quarter of last year to Rs 111.72 crore.

With this, SCI has achieved an average growth of 188 per cent in net profit during the last four quarters. Indeed, with freight rates booming since the middle of last year, SCI reported cash profit margins (CPM) of 46.51 per cent in the last quarter (January-March) of 2000-01. It returned a cash profit margin of 36.40 in the first quarter of this year (2001-02) on a sales growth of 29.15 per cent.