Shreeji Shipping IPO Opens — Should You Bid? Read DRChoksey's Report For Key Details

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DRChoksey Report

Shreeji Shipping Global Ltd. an integrated shipping and logistics services provider in India will launch its initial public offering on Aug. 19 and the offer closes on Aug. 21. The company has fixed the price band in the range of Rs 240 to Rs 252 per equity share.

Investors can place bids starting from a minimum of 58 shares and in multiples thereafter.

The Rs 410.7-crore IPO comprises only of fresh issue of 1.62 crore shares with a face value of Rs 10 each.

The allotment for the Shreeji Shipping IPO is expected to be finalized on Aug. 22. 

The shares will be listed on both the National Stock Exchange and the BSE on Aug 26.

Beeline Capital Advisors Pvt. Ltd., and Elara Capital (India) pvt. Ltd. are the book-running lead managers for the public issue while Bigshare Services Pvt. Ltd. is the registrar to the offer.

Objects of the Offer

• Acquisition of Dry Bulk Carriers in Supramax category in the secondary market.

• Pre-payment/ re-payment of certain outstanding borrowings availed by the Company.

• General corporate purpose.

Strategies:

• Continued Focus on Cost Optimization and Operational Efficiency.

• Continued Investment in Fleet of Vessels and Earthmoving Equipment.

• Focus on Expanding Business Operations from Land to Port to Capitalize on Industry Opportunities.

• Acquiring New Customers and Expanding into New Sectors.

Outlook:

Shreeji Shipping Global, is an integrated shipping and logistic solutions provider for dry bulk cargo, with an operational experience of three decades the coastal shipping and marine logistics business. It has deep expertise in handling diverse range of dry bulk cargo including coal, clinker, salt, iron-ore, pet coke, sulphur, limestone and other commodities.

The Company’s operations spans over 20+ ports and jetties, predominantly located along the western cost of India and overseas locations including Sri Lanka and West Africa. As of March 31, 2025, the Company owns a fleet of 80+ vessels and 370+ equipment's to facilitate the cargo handling and other port operations smoothly and effectively.

Shreeji Global’s revenue and EBITDA grew at -9.9% and 17.7% CAGR between FY23-25. Revenue witnessed a sharp decline as it lost some customers, while Ebitda grew at a healthy pace despite of decline in revenue, led by its cost optimization, reduction in equipment rentals and its focus on in-house maintenance of its fleet and equipment, which have resulted in significant improvement in Ebitda margins from 22.8% in FY23 to 38.9% in FY25.

The company is well-positioned to capitalize on the favorable macroeconomic environment and strong growth in overall cargo volume handled at Indian ports, which is expected to grow at 10.8% CAGR over FY24-30, driven by several initiatives taken by the government including Sagarmala Programme and Maritime India Vision 2030, aimed at enhancing infrastructure and connectivity.

Shreeji Global through its initial issue plans to raise Rs 4.1 billion to fund capex worth Rs 2.5 billion for acquisition of Supramax dry bulk carriers for expanding its business and diversifying into new segments and geographies, Rs 0.2 billion for repayment of borrowings and Rs 1.4 billion for general corporate purposes.

The company’s initial issue is available at 16.3x TTM EV/Ebitda, compared to the peer average valuation of 4.8x TTM EV/Ebitda. Although, the peers are not directly comparable, the company’s initial issue appears fully priced in.

Despite higher valuations, we believe the company can provide higher risk adjusted returns led by its superior return profile, rapid increase in fleet size, and higher operating leverage kicking in with higher scale of operations. We assign a “Neutral” rating to the issue.

Risks:

High Revenue Dependence on Largest and Top 10 Customers

Shreeji shipping global derives a substantial share of revenue from a concentrated customer base. Although its dependency on its top 10 customer base has reduced from ~76% in FY23 to ~64% in FY25, yet the largest customer accounted for 21% of the revenues in FY25. Decline is revenue and business from loss of the customer could materially impact its operations, cash flows, and financial performance.

Dependence on Key Industries for Revenue

The company derives a significant share of revenue from customers in oil & gas, energy & power, and coal, and has increased overtime from ~46% in FY23 to ~54% in FY25—making it vulnerable to industry fluctuations that impact volumes, pricing and overall business performance.

High Dependence on Cargo Handling for Revenue Generation and Exposure to Transportation-Related Risks and Inadequate Insurance Coverage

The Company derived ~79% of the overall revenue through handling of cargo volumes in FY25. It handled a cargo volume of 15.7 MMT in FY25 across 20+ ports spread over India and overseas locations. With a higher operating leverage business, even a minor declines in cargo volumes or pricing can significantly impact margins, making sustained volume optimization critical to financial performance.

Intense Competition from Domestic and International Players

The shipping and logistics industry is highly competitive, driven by service quality, pricing, and asset availability. Larger players with greater scale and resources may offer lower prices or broader services, posing a risk to customer retention and growth.

Dependence on Leased Premises for Key Operations and Operational and Regulatory Risks from Dependence on Non-Major Ports

The company’s reliance on state-administered Non-Major Ports, with varying regulations and infrastructure, exposes it to policy changes, tariffs, cargo restrictions, and operational disruptions that could impact efficiency, scalability, and performance.

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