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Crisil Ratings revises outlook on ratings of Transworld Shipping Lines to 'stable'

14-Apr-25 14:03 Hrs IST

Crisil Ratings stated that the outlook revision factors in the sustained improvement in the operating and financial performance of the company owing to uptick in charter rates driven by favorable demand and improving industry dynamics, with optimum utilisation of fleet capacity.

The company is expected to achieve revenue of over Rs 460 crore in fiscal 2025, registering over 60% growth (Rs 282 crore in fiscal 2024), with operating profit before interest and tax (OPBDIT) margin of over 35%.

Furthermore, TSLL's revenue is expected to grow at 15-20% over the medium term, driven by an increasing share of dry bulk (DB) vessels and stable business from chartering with Unifeeder ISC FZCO (Unifeeder), and OPBDIT margin is expected to sustain at 28-30%.

The company continues to benefit from steady cash flow from long-term framework chartering agreement (FCA) with Avana Logistek (Avana) (since Transworld Feeders Pvt Ltd (TFPL) has been merged with Avana in May 2024), a group concern of Unifeeder.

The FCA ensures volume deployment and steady cash flow for TSLL. Unifeeder is a subsidiary of DP World, based in the United Arab Emirates. DP World is among the leading port terminal operators in the world.

The net cash accrual to total debt ratio improved to 0.3 time in the first nine months of fiscal 2025 compared with 0.1 time in fiscal 2024. The interest coverage ratio has also improved to 5 times in the first nine months of fiscal 2025 compared with 1.9 times in fiscal 2024 and is estimated to be over 4.5 times in fiscal 2025.

The financial risk profile remains supported by adequate liquidity in the form of unencumbered cash and bank balance of Rs 61 crore as on 31 December 2024, excluding the debt service reserve account (DSRA) and other lien marked fixed deposits totaling Rs 51.78 crore. TSLL is also expected to maintain a liquid surplus of over Rs 50 crore on a steady-state basis.

TSLL is expected to incur capital expenditure (capex) of Rs 700 crore over the next 3-4 fiscals for purchase of four new replacement container vessels and two new vessels, which will be funded by a mix of debt and equity, in the ratio of 3:1. The company plans to fund the equity portion from sale of older vessels. In addition, the company will also have dry docking expenses of over Rs 100 crore over the next three fiscals through 2028 which shall be funded through a mix of debt and internal accrual.

The rating continues to reflect the established market position of TSLL in the shipping business, steady cash flow from long-term FCA with Avana, and operational and financial synergies from association with the Transworld group that has extensive experience in shipping and logistics.

These strengths are partially offset by a moderate financial risk profile, susceptibility to fluctuations in charter rates and exposure to intense competition in the global shipping industry.

Transworld Shipping Lines (TSLL) owns and operates vessels for container feeder operations between Indian and international container trans-shipment ports. The company has diversified into logistics, transportation, warehousing and distribution services. Post-sale of its containerised domestic coastal and EXIM feeder shipping business to Avana, the company follows an asset-heavy business model with owning and long-term chartering of vessels.

The scrip shed 0.59% to end at Rs 267.80 on the BSE on Friday.