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Mercator Lines (Rs 65): Buy



Mercator Lines can touch target of Rs 87: Emkay
9 Oct 2009, 1215 hrs IST, ET Bureau

MUMBAI: Emkay Global Financial Services expects Mercator Lines to touch target of Rs 87 on the upside.


“Mercator Lines is breaking out of an ascending triangle and daily momentum has started to pick up. The volumes have been very encouraging on breakout, also note that how volumes have expanded into rallies since July hinting at accumulation over last few months. The stock should target Rs 87 with reversals at Rs 55.7,” the recommendation said.

ANOTHER ANALYST
We recommend a buy in Mercator Lines from a short-term horizon. It is perceptible from the charts of the stock that since its March low of Rs 21 the stock has been on an intermediate-term uptrend. However, after encountering resistance at Rs 76 in June, the stock went through a medium-term correction till the July low of Rs 42. Later, the stock resumed its uptrend, taking support in the Rs 42-45 band. In mid-September, it crossed the 21-day and 50-day moving averages and is currently trading way above them. On October 8, the stock jumped 9 per cent, accompanied by high volumes and began to shape a flag pattern. The daily relative strength index (RSI) is featuring in the bullish zone and the weekly RSI is on the brink of entering this zone. Both the daily and weekly moving average convergence and divergence indicators are hovering in positive territory. Taking into consideration that the stock’s intermediate-term uptrend-line is intact we are bullish from a short-term perspective. We expect it to move up until it hits our price target of Rs 72. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 61.5.

Yoganand D.

http://www.blonnet.com/2009/10/14/stories/2009101450550200.htm
source:


Block deal in Mercator Lines
Mumbai, Aug. 26 The shares of Mercator Lines were in the limelight on Wednesday, after a block deal of 51.75 lakh shares was reported on the BSE. The shares were bought by Albulla Investments Funds from Mavi Investment Fund Ltd at Rs 56.5 a share. Mavi Investment Fund Ltd holds 2.19 per cent stake in the company. However, no further information was given. Around 89.43 lakh shares were traded during the day. The Mercator stock touched an intra-day high of Rs 62.25 and closed 9.33 per cent higher at Rs 61.50 on the BSE. - Our Bureau

Mercator Lines targets 30 mt from Mozambique coal mine
Varada Bhat


Mumbai, June 10 2009

Mercator Lines, India’s second largest private shipping company, has targeted production of 30 million tonnes (mt) of coal from its Mozambique mine once its starts production. The mine has estimated recoverable reserves of one billion tonnes.

But the date of actual production is still some time away, and sources say it is expected to kick off in 2010.

“We are still carrying out feasibility studies to develop the infrastructure needed. It will take us some time as it is a large asset and we a need lot of investments to produce 2.5 million tonnes every month,” Mr H.K. Mittal, Chairman, Mercator Lines, told Business Line.

Without offering the financial details, he reiterated that the company had enough funds for the project.

Mining sector foray


Mercator recently entered the coal mining sector by acquiring three mines in Indonesia and one in Mozambique as part of its backward integration initiative.

“We were into transportation and handling of coal. So we decided to get into coal mining,” said Mr Mittal.

The company plans to produce 1.5-2 mt of coal this fiscal from its Indonesian mines which started production a year ago.

“We have started with small mines to get the experience and will, in the future, ramp up production to 10 mt,” he added.

Mercator reported income of Rs 76.90 crore from its coal mining business in 2008-09, its first year of operations.

Freight revenue


According to a shipping analyst, with the global freight market remaining dampened, these businesses will de-risk the company’s earnings from the cyclicality related to shipping freight revenues.

“This will provide revenue generation through sale of coal in domestic/international markets and its transhipment through its own ships,” he said.

Mercator posts 15% rise in net

Mumbai, May 20

Long-term contracts have helped Mercator Lines post a 14.9 per cent increase in net profit for 2008-09 despite the collapse in the dry bulk shipping market last year. Net profit for the year ending March 31, 2009 was up at Rs 376.45 crore from Rs 327.65 crore last year. Total income increased by 45.11 per cent to Rs 2,248.82 crore (Rs 1,549.72 crore), said a statement from Mercator. “Despite a weak economic environment and depressed freight rates, Mercator has delive red good results,” said Mr H.K. Mittal, Executive Chairman, in a press release. During the year, the company started its coal mining activities which generated revenue of Rs 77 crore.

– Our Bureau


Mercator to sharpen focus on dredging, coal mining
Has acquired mines in Indonesia, Mozambique.

Amit Mitra


Mumbai April 16 With the global freight market remaining dampened due to recessionary trends, Mercator Lines, India’s second largest private shipping company, has decided to sharpen focus on its other businesses — dredging and coal mining.

The company recently entered the coal mining sector by acquiring three mines in Indonesia and one in Mozambique, as part of its backward integration initiative. “We are into transportation and handling of coal. So we decided to get into coal mining,” Mr H.K. Mittal, Chairman of Mercator Lines, told Business Line.

The company plans to produce between 1.5 million tonnes (mt) and 2 mt of coal from its Indonesia mines in the current fiscal. “Over the next three to four years, we will be ramping up production to 10 mt tonnes through acquisition of more mines,” Mr Mittal said.

The Mozambique mine, where production is yet to start, is spread over an area of 180-sq.km, with estimated recoverable reserve of one billion tonnes.

To acquire more dredgers


The company also plans to enhance its focus on dredging business, seeing major opportunities in the domestic dredging market as Indian ports plan to expand capacities and new ports are in the pipeline. It plans to add two new dredgers to its fleet of four in the current quarter — at a cost of $110 million.

Within the next three years, Mercator plans to expand its dredging fleet to 10, which will include both cutter suction and trailer suction dredgers. Earlier, the company leased out the dredgers to Dredging Corporation of India (DCI), but now it operates these vessels on its own.

The company has not postponed its acquisition plans despite recessionary trends. “On the contrary, we feel this is the best time to buy assets. Lots of second-hand ships are available at much lower prices as compared to some months ago,” said Mr Mittal. .

Ships can be purchased at prices 20 to 50 per cent lower depending on the category of vessels. New ships at different shipyards were also available, as the owners could not pursue expansion plans due to tight liquidity position.

The company, which spent $310 million to acquire new assets, including a very large crude carrier, will be buying a few bulk carriers this fiscal. Financing, however, was still a problem, he said.

Sharp fall in tanker rates


While the dry bulk market is showing some signs of improvement, tanker rates fell sharply in the last three months. The average charter rate for a VLCC fell from $44,065 per day in January 2009 to $30,672 in February and $25,177 in March. On April 8, the VLCC rate was ruling at about $10,536 per day.

The Baltic Dry Index, which measures the dry bulk freight rates, increased from 1818 in February 2009 to 1958 in March. The rates are just about sufficient to meet the operating costs of shipping companies, say industry analysts.

Mercator Lines plans to acquire more oil rigs

Mr H.K. Mittal, Executive Chairman of the company, made it clear that the company had no immediate plans to acquire offshore supply vessels or multi-purpose supply vessels required by the oil sector.

Santanu Sanyal


Kolkata, May 20 Mercator Lines has before it a proposal for acquiring more oil rigs.

“We are already having one jack-up rig built at Keppel in Singapore and we’re considering more acquisitions, preferably by way of outright purchase,” Mr H.K. Mittal, Executive Chairman of the company, told Business Line.

“To have a new rig built in a yard will take at least three years, an option which perhaps can be dispensed with in favour of outright purchase of newly-built readily available in the market.”

Exploring market


As he felt, there might be no dearth of newly-built equipment for immediate acquisition but only at a price. “In-chartering of old equipment is not so much in our view, but then, we’re exploring the market and keeping our options open,” Mr Mittal observed.

He, however, made it clear that the company had no immediate plans to acquire OSVs (offshore supply vessels) or MSVs (multi-purpose supply vessels) required by the oil sector.

“Our priority is clear: we’ll go for high value large assets,” he added.

Oil sector


The growing Indian oil sector, as Mr Mittal pointed out, was holding out promise. “But that does not mean that our proposed acquisitions will be deployed only in India,” he said, adding, “whosoever, anywhere in the world, gives the best price will get our equipment”.

The jack-up rig being built in Singapore will be delivered in March 2009 and will cost $190 million and its deployment has already been firmed up for three years.

Mercator Lines, as the Chairman pointed out, was essentially a shipping firm, the second largest private sector shipping company in the country, with a diversified fleet comprising 20 vessels, including nine tankers (total tonnage 1.04 million dwt), eight bulk carriers (0.61 million dwt) and three dredgers (combined capacity 20,000 cbm).

The company’s acquisition of dredgers is a recent development and all the three dredgers have been placed with the Dredging Corporation of India for employment.