Started in 2002, Seven Island shipping Limited is third largest liquid seaborne logistics company in India by deadweight tonnage, as of June 2017. All its vessels are registered and flagged in India and operate as Indian owned and flagged vessels. Company operates primarily along the Indian coast, Arabian gulf and South-east Asia. The liquid seaborne logistics business can be classified into crude oil trade and liquid products trade. SISL operates in both these categories of business. They transport crude oil primarily from the Arabian gulf countries to Indian refineries along the Indian coast. Their crude oil logistics business is carried out through Suezmax and VLCC vessels. They also transport black oils such as fuel oil and light diesel oil, white oils such as naphtha, high speed diesel, superior kerosene oil and gasoline and lube oils primarily along the Indian coast. Their oil product logistics business is carried out through Small and MR vessels. Company's principal customers are IOCL, HPCL and BPCL. SISL began operations with only one vessel in Financial Year 2003 and has, over the last 15 years, acquired 18 vessels and sold six vessels. Their capacity expanded from 6,009 MT of deadweight as of March 31, 2003 to 66,889 MT of deadweight by March 31, 2010. In Financial Year 2010, SISL purchased its first MR vessel. In Financial Year 2016, company acquired its first two crude oil vessels, M.T. Crimson and M.T. Saffron, which were of the Suezmax type and substantially increased our capacity. In Financial Year 2017, SISL acquired a VLCC vessel, M.T. Lavails. As of the date of this Draft Red Herring Prospectus, SISL owns and operates 12 liquid vessels with a total deadweight capacity of 9,00,558 MT out of which two are Small vessels, seven are MR vessels, two are Suezmax vessels and one is a VLCC vessel. As of the date of this Draft Red Herring Prospectus, company has 10 of its 12 liquid vessels on time charters and two on voyage charter. In terms of the guidelines issued by the Directorate General of Shipping, Ministry of Shipping, Government of India, all Indian flagged vessels have a right of first refusal in any tender by an Indian oil company for seaborne transportation of oil and other liquid products. The next preference is given to Indian owned but foreign flagged vessels. In Financial Year 2015, Financial Year 2016 and Financial Year 2017, the total amount of crude oil imported by Indian oil companies was 189.44 MMT, 202.9 MMT and 213.9 MMT. However, only 11.5% and 13.9% of the crude oil liftings into India in Financial Year 2015 and Financial Year 2016 respectively, were carried out by Indian flagged vessels. So there is very huge scope of growth for company. On performance front, RNLAML has posted turnover/net profits of Rs. 712.67 cr. / Rs. 198.96 cr. (FY13), Rs. 784.03 cr. / Rs. 302.30 cr. (FY14), Rs. 930.11 cr. / Rs. 349.59 cr. (FY15), Rs. 1271.07 cr. / Rs. 390.12 cr. (FY16) and Rs. 1400.44 cr. / Rs. 405.57 cr. (FY17). For three months ended on 30.06.17 of the current fiscal, it has reported net profit of Rs. 83.44 cr. on a turnover of Rs. 378.15 cr. Thus company has posted healthy growth over last couple of years on consistent basis. RNLAML has posted an average EPS of Rs. 6.68 and average RoNW of 22% for last three fiscals. Issue is priced at a P/BV of 8.97. It has no listed peers to compare with as per DRHP. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 43.92. As there is no peers to compare, so its difficult to say what will be proper valuations.. As per financials, company's growth is good, RoNW is 22% for last three fiscals and issue is priced at P/E of around 44. Mutual Funds and Asset Management sector is growing at good pace and expected to continue same growth for next couple of years and being one of the largest player of sector with wide network across the country, company expected to show same growth for next couple of years. So we give SUBSCRIBE rating to this IPO.
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