Friday, 7 November 2008

Buy Aban Offshore; target Rs 1365: Emkay Global

Emkay Global Financial Services has recommended a buy rating on Aban Offshore, with price target of Rs 1365, in its reports dated November 5, 2008. "Aban Offshore’s Q2FY2009 & H1FY2009 consolidated net profit is below expectations primarily because of lower than expected EBIDTA margins and lower profitability of its 50% JV Venture Drilling. Revenues for the quarter stood at Rs 8.24 billion ( higher than expectation) registering a yoy growth of 73%, driven by re-pricing of rigs in the standalone entity, higher operating fleet days for Sinvest rigs an addition of Aban VIII in Aban Singapore."

"Even though Aban boasts of high earnings visibility of 90% for FY2009 and 73% for FY2010, its valuation has decline in line with its international peers. Hence to account for sharp decline in valuation of international drilling companies we are downgrading our price target for Aban to Rs 1365. We have valued Aban at 20% discount to valuations commanded by its international peers. We have used average of three valuation measures PER, P/B and EV/EBIDTA. Maintain BUY," says Emkay Global Financial Services' report.

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Source: Moneycontrol

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