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Great Offshore -Performance to improve in FY12…
Great Offshore Ltd (Great Offshore) reported disappointing results in
Q3FY11 with its topline declining 18% YoY while net profit registered a
decline of 96%. Lower fleet utilisation was the main contributor to the
decline in topline with drilling rigs and construction vessels utilisation
at 43% in Q3FY11 against 100% in Q3FY10. Going forward, we expect
revenues in FY11 to decline by 7% to | 1081.2 crore but expect 23%
revenue growth in FY12 as utilisation levels of its drilling rigs increases.
Two of its assets (jack-up rig Kedarnath and drill barge Badrinath) have
secured long-term charters for five and three years, respectively,
providing substantial revenue visibility as they would be operating at
100% utilisation levels in FY12.
Great Offshore operates a diversified fleet of 47 vessels consisting of 28
offshore support vessels, 12 tugs, three construction barges, three rigs
and one floating dock and is one of the best plays in offshore space.
Valuations are still attractive and Great Offshore is likely to get re-rated.
Disappointing performance in Q3FY11
Great Offshore reported an 18.2% YoY drop in revenues at | 197.8 crore
as against | 241.9 crore in Q3FY10. The main factor contributing to the
drop in topline was lower utilisation of two of its major revenue earning
assets namely, Kedarnath and Badrinath. EBITDA declined 34% YoY to |
76.3 crore due to a decline in EBITDA margin by 940 bps to 38.6% from
48% in Q3FY10.
Valuation
At the CMP of | 295, the stock is trading at 5.5x FY12E EPS of | 53.8 and
0.8x FY12E book value of | 366.5. We have valued Great Offshore on a
P/BV and P/E multiple basis to arrive at a price target of | 343. We
recommend a BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Great Offshore -Performance to improve in FY12…
Great Offshore Ltd (Great Offshore) reported disappointing results in
Q3FY11 with its topline declining 18% YoY while net profit registered a
decline of 96%. Lower fleet utilisation was the main contributor to the
decline in topline with drilling rigs and construction vessels utilisation
at 43% in Q3FY11 against 100% in Q3FY10. Going forward, we expect
revenues in FY11 to decline by 7% to | 1081.2 crore but expect 23%
revenue growth in FY12 as utilisation levels of its drilling rigs increases.
Two of its assets (jack-up rig Kedarnath and drill barge Badrinath) have
secured long-term charters for five and three years, respectively,
providing substantial revenue visibility as they would be operating at
100% utilisation levels in FY12.
Great Offshore operates a diversified fleet of 47 vessels consisting of 28
offshore support vessels, 12 tugs, three construction barges, three rigs
and one floating dock and is one of the best plays in offshore space.
Valuations are still attractive and Great Offshore is likely to get re-rated.
Disappointing performance in Q3FY11
Great Offshore reported an 18.2% YoY drop in revenues at | 197.8 crore
as against | 241.9 crore in Q3FY10. The main factor contributing to the
drop in topline was lower utilisation of two of its major revenue earning
assets namely, Kedarnath and Badrinath. EBITDA declined 34% YoY to |
76.3 crore due to a decline in EBITDA margin by 940 bps to 38.6% from
48% in Q3FY10.
Valuation
At the CMP of | 295, the stock is trading at 5.5x FY12E EPS of | 53.8 and
0.8x FY12E book value of | 366.5. We have valued Great Offshore on a
P/BV and P/E multiple basis to arrive at a price target of | 343. We
recommend a BUY rating on the stock.
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