CRISIL maintains valuation grade of 2/5 to Dolphin Offshore

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CRISIL maintains valuation grade of 2/5 to Dolphin Offshore

CRISIL Research has come out with its report on Dolphin Offshore. The research firm has initiated coverage on the company with a fundamental grade of 2/5 and maintained fair value of Rs 122 per share, in its July 29, 2011 report.

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CRISIL Research has come out with its report on Dolphin Offshore . The research firm has initiated coverage on the company with a fundamental grade of 2/5 and maintained fair value of Rs 122 per share, in its July 29, 2011 report.

Dolphin Offshore Ltd's (Dolphin's) Q1FY12 revenues and profitability were in line with CRISIL Research's expectations. Although revenues declined y-o-y, EBITDA margin turned positive due to booking of income for projects where the costs had been booked in earlier quarters (claim recovery or change orders). Our outlook for the rest of FY12 and for FY13 remains subdued due to poor visibility on the company's EPC order book and uncertainty surrounding a) the claims relating to completed change orders currently under negotiation with clients, and b) the payment of liquidated damages to clients for delay in completion of projects. We may revise our estimates post interaction with the management. We maintain our fundamental grade of 2/5.

Q1FY12 result analysis
• Dolphin's Q1FY12 revenues declined by 13.7% y-o-y to Rs 692 mn as the company has not executed any major turnkey project during the quarter.

• EBITDA margin turned positive y-o-y from -11.9% to 20.0%. In Q1FY11, the company had undertaken significant additional work resulting in extra cost for EPC contracts, against which it was unable to book revenue due to non-receipt of change orders.

• The company reported PAT of Rs 65 mn against loss of Rs 123 mn in Q1FY11. Accordingly, EPS turned positive y-o-y from Rs -7.8 to Rs 3.9.

Valuation: Current market price has downside
We continue to use price-to-book value multiple approach to value Dolphin. We maintain our fair value estimate at Rs 122 per share. At the current market price of Rs 144, the valuation grade is 2/5, says CRISIL Research report.

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"

To read the full report click on the attachment