Initiating Coverage on Great Offshore - Motilal Oswal

Great Offshore( GOFF IN; Mkt Cap USD 299 mn, CMP Rs 360, Buy)

- 4 Operational rigs in FY12 to add Rs. 300 cr to revenue
- Offshore vessels and Engineering to gain from higher offshore activity in India
- Strong positive free cashflow could fuel inorganic growth
- Revenues are likely to rise over FY10-FY12E at 11% CAGR with earnings growth of 18% CAGR. Earnings in FY11 will, however, dip due to lower utilization of rigs.

- Conversion of $4 cr FCCBs outstanding at Rs. 565 per share is not considered in our EPS. Fully diluted EPS for FY11 and FY12 will be Rs. 47 and Rs. 68.

At 5.1xFY12 earnings the stock is extremely cheap as compared to average P/E multiples of 7.4x historical earnings.

Source : Equity Bulls

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