Aban Offshore Ltd - Contract renewals & debt refinance remain key triggers - Emkay

Reco: HOLD
CMP: Rs 394
Target Price: Rs 405

- Revenues at Rs8.5bn (+16.2% yoy) -below est (Rs9.4bn) led by lower operating days for jack-up rig DD 7 & Aban II leading to lower than est EBIDTA of Rs5.06bn (+9.8% yoy).

- Higher interest cost (Rs2.96bn, + 35.5% yoy) led by higher coupon rates of recently refinanced bond issue, severely impacts profits. APAT at Rs681 mn -27.6% yoy below est.

- Though interest cost pressure likely to continue, Aban plans to refinance standalone INR debt with ECB (looking to save ~600 bps). Cut FY13 EPS by 3.5% led by higher interest cost, however see 3.1% upgrade in EBITDA led by lower rig opex.

- DD 2,3,4,5 coming for renewal in 2QFY13- revenue visibility at 79%/48% for FY13/14 as 6 rigs due for renewal in FY13. Contract renewals & debt refinance remains key stock triggers to improve cash flow visibility. Maintain HOLD.

Source : Equity Bulls

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