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http://content.icicidirect.com/mailimages/ICICIdirect%20ABGShipyard_Q3FY12.pdf
C o r e E B I T D A m a r g i n , o r d e r b o o k q u a l i t y
i m p r o v i n g …
ABG Shipyard (ABG) reported a better-than-expected performance in
Q3FY12 on the topline front while net profit was marginally lower than
our estimates. ABG reported revenues of | 619.3 crore vs. our
expectation of | 609 crore and net profit of | 46.5 crore (I-direct estimate:
| 51.6 crore) for Q3FY12. EBITDA margin (including subsidy) improved by
75 bps QoQ and was higher than our estimate of 23.5% at 24.6%. The
heartening factor in ABG’s performance is the improvement in the core
EBITDA margin (excluding subsidy), which has improved by 100 bps on a
QoQ basis to 23.5%. However, higher depreciation (up by 5% QoQ) and
interest cost (up by 18% QoQ) continue to dampen the net profit. Over
Q1FY12 to Q3FY12, ABG’s core EBITDA margin has risen by 430 bps
signifying an improvement in the core operational performance. With
execution also picking up gradually, profitability is expected to see
accelerated growth in FY13.
ƒ Order book quality improving
ABG’s total order book stands at ~ | 15500 crore, of which the
unexecuted order book is at ~ | 10500 crore. Though more than 20% of
the order book comprises orders placed by ABG’s group companies,
recently, the heartening factor has been ABG’s ability to bag prestigious
orders. During Q1FY12, the company had secured an order of | 970
crore for construction of two cadet training ships for the Indian Navy. In
January 2012, ABG bagged an order worth | 500 crore from Shipping
Corporation of India for construction of six anchor handling tugs cum
supply vessels (AHTS). These orders from top notch Indian PSU clients
bode well for potential order inflows from these marquee clients and
provides strong revenue visibility, going ahead.
V a l u a t i o n
At the CMP of | 434, the stock is trading at 8.8x FY13E EPS of | 49.1 and
1.32x FY13E book value of | 328. Considering the improvement in core
EBITDA margin and order book quality, we have valued the stock at 1.3x
FY13E book value (Q1FY12: 1.1x) to arrive at a price target of | 427 and
recommend a HOLD rating. Existing investors can also continue to hold
the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect%20ABGShipyard_Q3FY12.pdf
C o r e E B I T D A m a r g i n , o r d e r b o o k q u a l i t y
i m p r o v i n g …
ABG Shipyard (ABG) reported a better-than-expected performance in
Q3FY12 on the topline front while net profit was marginally lower than
our estimates. ABG reported revenues of | 619.3 crore vs. our
expectation of | 609 crore and net profit of | 46.5 crore (I-direct estimate:
| 51.6 crore) for Q3FY12. EBITDA margin (including subsidy) improved by
75 bps QoQ and was higher than our estimate of 23.5% at 24.6%. The
heartening factor in ABG’s performance is the improvement in the core
EBITDA margin (excluding subsidy), which has improved by 100 bps on a
QoQ basis to 23.5%. However, higher depreciation (up by 5% QoQ) and
interest cost (up by 18% QoQ) continue to dampen the net profit. Over
Q1FY12 to Q3FY12, ABG’s core EBITDA margin has risen by 430 bps
signifying an improvement in the core operational performance. With
execution also picking up gradually, profitability is expected to see
accelerated growth in FY13.
ƒ Order book quality improving
ABG’s total order book stands at ~ | 15500 crore, of which the
unexecuted order book is at ~ | 10500 crore. Though more than 20% of
the order book comprises orders placed by ABG’s group companies,
recently, the heartening factor has been ABG’s ability to bag prestigious
orders. During Q1FY12, the company had secured an order of | 970
crore for construction of two cadet training ships for the Indian Navy. In
January 2012, ABG bagged an order worth | 500 crore from Shipping
Corporation of India for construction of six anchor handling tugs cum
supply vessels (AHTS). These orders from top notch Indian PSU clients
bode well for potential order inflows from these marquee clients and
provides strong revenue visibility, going ahead.
V a l u a t i o n
At the CMP of | 434, the stock is trading at 8.8x FY13E EPS of | 49.1 and
1.32x FY13E book value of | 328. Considering the improvement in core
EBITDA margin and order book quality, we have valued the stock at 1.3x
FY13E book value (Q1FY12: 1.1x) to arrive at a price target of | 427 and
recommend a HOLD rating. Existing investors can also continue to hold
the stock
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