Hold Aban Offshore - Emkay

Reco: HOLD
CMP: Rs 445
Target Price: Rs 465

Earnings disappoint-Interest Cost to Intensify

- 3Q12 PAT at Rs731 mn (-8% qoq) lower than est (Rs1.07bn) dragged by lower operating days for Aban III & Aban V & higher than expected interest cost (+12% qoq)

- Revenues at Rs8.6bn (+13% qoq) came in below est (Rs9.2bn) led by lower operating days for Aban III & Aban leading to lower than expected EBIDTA of Rs5.06bn (+9.1 qoq)

- 3Q earnings disappointment & higher interest charge lead to FY12/13 EPS of -9.1% /-3.8%. Lower TP to Rs465. Recent bond redemption (USD 160 mn) came in at a steep cost (Coupon at 12% vs earlier 9.3%, interest cost pressure to intensify

- Though Aban boasts of revenue backlog of ~$1.9 bn, revenue visibility stands at 65% for FY13 as 6 rigs are due for contract renewal in H2FY13. Lower FY13 visibility & increasing interest cost leaves little upside -Downgrade to HOLD.

Source : Equity Bulls

Keywords