Strategic Focus on Agri Exports Drives Seacoast’s Q2 Revenue
Company Overview:
Seacoast Shipping Services Ltd has emerged as a key player in the freight forwarding and shipping agent industry, particularly in Gujarat. The company specializes in providing comprehensive logistics solutions to exporters and importers, with a strategic focus on Agri export commodities via containers from Mundra port. Additionally, Seacoast has diversified into offering specialized project transportation services, achieving significant market prominence in Gujarat and securing a notable 10.68% market share.
Robust Growth in EBITDA (+88.8% YoY) driven by Operating efficiency
In Q2FY24, the company witnessed an impressive 88.8% YoY growth in EBITDA, reaching 10.7 Cr, driven by enhanced operating efficiency. Notably, employee costs saw a substantial 94.3% YoY reduction (-93.8% QoQ) to 0.02 Cr, a stark contrast from 0.43 Cr in Q2FY23 and 0.39 Cr in the previous quarter. This reduction in operating expenditure contributed to a significant increase in EBITDA margins, up by 367 bps YoY (+122 bps QoQ) to 8.84% (PQ-7.62).
ROE declined 182 bps QoQ but ROA expanded 63 bps QoQ in Q2
As of September 30, 2023, total equity exhibited a robust QoQ growth of 98.8%, reaching 123.21 Cr. This growth includes a 60% QoQ increase in equity share capital and a substantial 145% QoQ surge in reserves and surplus. As a result Despite a 98.5% growth in PAT in Q2FY24, the ROE experienced a 182 bps QoQ decline, standing at 6.27%. In contrast, the ROA expanded by 63 bps QoQ to 3.93%, driven by a 54% QoQ growth in PAT.
Operating Efficiency Boosts Margins in Q2
Q2FY24 witnessed a noteworthy decline in total operating expenditure, decreasing by 42.4% YoY (-62.5% QoQ) to 0.30 Cr. Within operating expenses, employee costs saw a substantial reduction of 94.3% YoY (-93.8% QoQ) to 0.02 Cr, while other expenses grew by 174% YoY and declined by 33.5% QoQ. Consequently, EBITDA margins expanded by 367 bps YoY (+122 bps QoQ) to 8.84%, and PAT margins grew by 282 bps YoY (+133 bps QoQ) to 6.36%.
Valuation and Key Ratios:
Seacoast is currently trading at a multiple of 9.23x EPS (TTM) and 0.37 at the current market price of 3.45, with the industry PE standing at 10.8x. The stock is trading at 1.51 times the book value of 2.29 Rs per share. In the EV/EBITDA multiple, the stock holds the 4th position among the top 7 peers at 6.71x, with the median at 7.52x. Despite a 182 bps QoQ decline in ROE to 6.27%, the ROA experienced a positive shift of 63 bps QoQ to 3.93%. The interest coverage ratio stands at a robust 13.9x, indicating the company’s strong solvency.
Q2FY24 Results Updates:
➡️ Revenue showed a commendable 10.4% YoY growth (+21.7% QoQ), reaching 121.42 Cr in Q2FY24.
➡️ EBITDA surged 88.8% YoY (+41.3% QoQ) to 10.73 Cr, driven by operational efficiency.
➡️ Operating expenditure reduction, particularly in employee costs (-94.3% YoY, -93.8% QoQ), contributed to the expansion of EBITDA and PAT margins by 367 bps YoY and 282 bps YoY, respectively.
➡️ PAT experienced a substantial 98.5% YoY growth (+54% QoQ), reaching 7.72 Cr due to top-line growth and operating efficiency
➡️ EPS for the quarter stood at 0.16 Rs (PQ-0.15 Rs), declining 86.2% YoY but growing by 6.67% QoQ.
Conclusion:
Seacoast Shipping Services Ltd has demonstrated robust financial performance in Q2FY24, marked by substantial growth in EBITDA, PAT, and operating efficiency. Despite a slight decline in ROE, the company has maintained strong solvency with a healthy interest coverage ratio. The stock’s current valuation, trading at 9.23x EPS and 1.51 times book value, positions it competitively within the industry. Overall, Seacoast Shipping Services Ltd continues to be a key player in the freight forwarding and shipping agent industry, showcasing resilience and adaptability in a dynamic market.
