Aban Offshore - Research Reports

Aban Offshore Q4FY2008 standalone pre-exceptional net profit at Rs415 millions
is ahead of expectations (Rs355 millions) primarily because of better than

expected topline growth. With three of its assets operating at re-priced contract

day rate (Aban II, Aban VI and FPU Tahara) Aban has reported a smart 65%
growth in its topline (Rs1964 million) despite of rupee appreciation against USD.
Operating profit for the quarter grew handsomely by 77% to Rs989 million,
primarily because of 42.6% decline in insurance cost and flat staff cost. Aban’s
Q4FY2008 pre-exceptional net profit increased by a staggering 129% to Rs415
million. However including for a one time extraordinary provision of Rs69.6
million on account of provisioning for interest rate and currency derivative
exposure, the reported net profit stood at Rs346 million and the same has grown

at 17%. Even after better than expected results for Aban, we are not changing our
earnings estimates. This is because like the standalone company, there could
possibly be interest rate and currency derivative exposure provisioning in
consolidated results. Hence we are not changing our earnings and awaiting
further clarity on derivative exposure taken by subsidiary Aban Singapore. Our
EPS estimates for Aban stand at Rs406 for FY2009 and Rs551 for FY2010. Aban
is currently trading at 8.5X its FY2009 earnings and 6.3X its FY2010 earnings. We
believe that offshore oilfield service’s industry fundamentals remain compelling
and Aban is the best play to drive the strong demand for offshore rigs and
continued uptrend in day rates. We maintain our Buy recommendation on the
stock with a price target of Rs6065.

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Shakti