Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r E B I T D A m a r g i n , h i g h e r i n t e r e s t c o s t
d e n t s b o t t o m l i n e …
Aban Offshore (Aban) reported a mixed performance for Q3FY12. Though
revenue was higher by 9% than I-direct estimates at | 865.9 crore (QoQ
growth of 13.5%), net profit was lower by 19% than I-direct estimate of
| 90.6 crore at | 73.1 crore (QoQ decline of 7.7%). Revenues have been
higher than our estimates mainly on account of deployment of Aban V
and Aban VII during the quarter, which we had factored to be deployed in
February, 2012. EBITDA increased by 9% QoQ to | 500.7 crore but the
EBITDA margin declined QoQ by 232 bps to 57.8%. The decline in
EBITDA margin on a QoQ basis has been due to higher staff costs (up
16% to | 93.1 crore) and increased expense on rental for machinery (up
by 142% to | 21.2 crore) and higher expenses on repairs & maintenance
(up by 231% to |13.3 crore). Interest and depreciation have increased by
12% and 8%, respectively, which has further subdued the net profit.
Increasing interest cost as percentage of EBITDA, which has risen from
43.7% in Q1FY11 to 51.3% in Q3FY12 has been denting the profitability of
Aban and is a cause for concern.
ƒ Fleet deployment status
During Q3FY12, Aban V was deployed for three years at ~ US$120,000
per day while Aban VII secured a contract of eight months at
~ US$55,000 per day. Aban II is currently under dry docking and is
expected to be deployed in Q4FY12. FPU Tahara has yet to secure an
order and remains idle. Currently, 16 out of 18 vessels are on contract.
The key parameter to watch in FY13 would be the renewal of contracts
for eight rigs that are going off-contract. Four of the rigs due for renewal
of contracts are currently working in Iran and have day rates at a
premium to current day rates in other regions. Relocating these rigs to
newer geographies may fetch lower rates leading to a downside risk.
V a l u a t i o n
At the CMP of | 495, the stock is trading at 5.0x FY13E EPS of | 99.3 and
0.81x FY13E book value of | 614. We have valued the stock at 0.70x
FY13E book value to arrive at a price target of | 430 and recommend a
SELL rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r E B I T D A m a r g i n , h i g h e r i n t e r e s t c o s t
d e n t s b o t t o m l i n e …
Aban Offshore (Aban) reported a mixed performance for Q3FY12. Though
revenue was higher by 9% than I-direct estimates at | 865.9 crore (QoQ
growth of 13.5%), net profit was lower by 19% than I-direct estimate of
| 90.6 crore at | 73.1 crore (QoQ decline of 7.7%). Revenues have been
higher than our estimates mainly on account of deployment of Aban V
and Aban VII during the quarter, which we had factored to be deployed in
February, 2012. EBITDA increased by 9% QoQ to | 500.7 crore but the
EBITDA margin declined QoQ by 232 bps to 57.8%. The decline in
EBITDA margin on a QoQ basis has been due to higher staff costs (up
16% to | 93.1 crore) and increased expense on rental for machinery (up
by 142% to | 21.2 crore) and higher expenses on repairs & maintenance
(up by 231% to |13.3 crore). Interest and depreciation have increased by
12% and 8%, respectively, which has further subdued the net profit.
Increasing interest cost as percentage of EBITDA, which has risen from
43.7% in Q1FY11 to 51.3% in Q3FY12 has been denting the profitability of
Aban and is a cause for concern.
ƒ Fleet deployment status
During Q3FY12, Aban V was deployed for three years at ~ US$120,000
per day while Aban VII secured a contract of eight months at
~ US$55,000 per day. Aban II is currently under dry docking and is
expected to be deployed in Q4FY12. FPU Tahara has yet to secure an
order and remains idle. Currently, 16 out of 18 vessels are on contract.
The key parameter to watch in FY13 would be the renewal of contracts
for eight rigs that are going off-contract. Four of the rigs due for renewal
of contracts are currently working in Iran and have day rates at a
premium to current day rates in other regions. Relocating these rigs to
newer geographies may fetch lower rates leading to a downside risk.
V a l u a t i o n
At the CMP of | 495, the stock is trading at 5.0x FY13E EPS of | 99.3 and
0.81x FY13E book value of | 614. We have valued the stock at 0.70x
FY13E book value to arrive at a price target of | 430 and recommend a
SELL rating.
No comments:
Post a Comment