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Performance likely to peak in FY12…
Garware Offshore (GOL) reported disappointing Q4FY11 results with
contraction in both topline and bottomline on a QoQ basis by 11.8%
and 89.5%, respectively. The topline declined as two of its vessels
remained idle for a part of the quarter while higher depreciation and
interest costs led to a contraction in the bottomline. We expect the
topline and bottomline of the company to improve in FY12 led by higher
fleet utilisation levels and addition of a new PSV. However, we expect
revenues to peak in FY12 and decline, thereafter, due to pressure on
charter rates and rupee appreciation.
Operating performance under pressure in Q4FY11
GOL reported an 11.8% QoQ drop in topline at | 50.9 crore in Q4FY11.
Two of its AHTS vessels i.e. Poorna and Mahananda had come off
contract and their mobilisation for new contracts during the quarter was
the main reason for the decline in the topline. The company’s EBITDA
declined to | 21.8 crore with a corresponding decline in EBITDA margin
to 42.8% in Q4FY11. Interest and depreciation increased 12.9% and
19.1%, respectively QoQ on account of the addition of a new PSV MV
Beaucephalus to the company’s fleet during the quarter. The decline in
topline along with higher depreciation and interest costs resulted in a
sharp drop in net profit to | 1.6 crore.
Long-term contracts provide comfort
GOL operates a fleet of 12 vessels, which consist of seven AHTS vessels,
four OSVs and one construction barge. The company has reasonably
good revenue visibility as 92% of its fleet is deployed on long-term
charter contract, which also ensures higher utilisation level.
Valuation
At the CMP of | 132, the stock is trading at 13.9x FY13E EPS of | 9.5 and
0.9x FY13E book value of | 143. We have valued the stock at 1.0x FY13E
book value to arrive at a price target of | 143 and recommend a HOLD
rating. Existing investors should also continue to HOLD the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Performance likely to peak in FY12…
Garware Offshore (GOL) reported disappointing Q4FY11 results with
contraction in both topline and bottomline on a QoQ basis by 11.8%
and 89.5%, respectively. The topline declined as two of its vessels
remained idle for a part of the quarter while higher depreciation and
interest costs led to a contraction in the bottomline. We expect the
topline and bottomline of the company to improve in FY12 led by higher
fleet utilisation levels and addition of a new PSV. However, we expect
revenues to peak in FY12 and decline, thereafter, due to pressure on
charter rates and rupee appreciation.
Operating performance under pressure in Q4FY11
GOL reported an 11.8% QoQ drop in topline at | 50.9 crore in Q4FY11.
Two of its AHTS vessels i.e. Poorna and Mahananda had come off
contract and their mobilisation for new contracts during the quarter was
the main reason for the decline in the topline. The company’s EBITDA
declined to | 21.8 crore with a corresponding decline in EBITDA margin
to 42.8% in Q4FY11. Interest and depreciation increased 12.9% and
19.1%, respectively QoQ on account of the addition of a new PSV MV
Beaucephalus to the company’s fleet during the quarter. The decline in
topline along with higher depreciation and interest costs resulted in a
sharp drop in net profit to | 1.6 crore.
Long-term contracts provide comfort
GOL operates a fleet of 12 vessels, which consist of seven AHTS vessels,
four OSVs and one construction barge. The company has reasonably
good revenue visibility as 92% of its fleet is deployed on long-term
charter contract, which also ensures higher utilisation level.
Valuation
At the CMP of | 132, the stock is trading at 13.9x FY13E EPS of | 9.5 and
0.9x FY13E book value of | 143. We have valued the stock at 1.0x FY13E
book value to arrive at a price target of | 143 and recommend a HOLD
rating. Existing investors should also continue to HOLD the stock.
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