CRISIL assigns valuation grade of 3/5 to ABG Shipyard

9314 Investors following ABG Shipyard. Share this News with them.

0

Like this story, share it with millions of investors on M3

CRISIL assigns valuation grade of 3/5 to ABG Shipyard

CRISIL Research has come out with its report on ABG Shipyard. The research firm has maintained the fundamental grade of 3/5 to the company in its November 21, 2011 report.

Post your opinion here

 

0

Tweet

Share on Tumblr

ABG Shipyard BSE | NSE 31/05/12 Are Mutual Funds betting on ABG Shipyard?

CRISIL Research has come out with its report on ABG Shipyard . The research firm has maintained the fundamental grade of 3/5 to the company in its November 21, 2011 report.

ABG Shipyard Ltd's (ABG's) Q2FY12 revenues were slightly above CRISIL Research's expectations due to faster order book execution as well as rupee depreciation. Revenues increased ~5% y-o-y to Rs 5,816 mn. EBITDA margin, however, declined by ~ 240 bps y-o-y to 23.8% due to decrease in subsidy income and increase in manufacturing expenses. Adjusted PAT declined by ~14% y-o-y to Rs 484 mn. We maintain the fundamental grade of 3/5.

Q2FY12 result analysis (Standalone)
• Revenues grew 4.7% y-o-y and 11.3% q-o-q to Rs 5,816 mn due to faster order book execution. It also benefitted from the rupee depreciation as nearly 70% of the revenue booked in the quarter was from export sales.

• EBITDA margin declined by ~ 240 bps y-o-y but increased ~ 160 bps q-o-q to 23.8%, primarily due to lower subsidy income and increase in manufacturing expenses. Subsidy income booked was ~ Rs 100 mn, which was below our expectations. Raw material cost as a percentage of sales declined ~ 1200 bps y-o-y to 47.1% because more labour intensive work (predominantly sub-contracting) was done during the quarter. As a result, other expenses increased by ~ 1430 bps because sub-contracting expenses are booked under this head.

• Depreciation expense increased ~73% y-o-y to Rs 244 mn due to partial capitalisation of shiplifting facility construction been undertaken at the Dahej yard.

• Adjusted PAT declined ~ 24% y-o-y to Rs 484 mn due to the decline in EBITDA margins and increase in capital cost. Adjusted PAT margin declined by 315 bps y-o-y to 8.3%.

Earnings estimates - revised downwards
We have reduced our revenue estimates for FY12 by ~2% to Rs 24,989 mn due to lower than expected subsidy income in H1FY12. However, we maintain our guidance for FY13. We have reduced our EBITDA margin estimate by 150 bps for FY12 and by ~100 bps for FY13 after factoring in lower subsidy income and increase in other expenses due to inflation. We reduce our EPS estimates by ~9% for FY12 and ~14% for FY13 to Rs 45.5 and Rs 36.2, respectively, due to increase in debt and capital cost post capacity expansion.

Valuation: Current market price is aligned
We continue to use the discounted cash flow method to value ABG and maintain the fair value of Rs 371 per share. At the current market price of Rs 393, the valuation grade is 3/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"