STOCKVIEW - ABG SHIPYARD

ABG Shipyard Ltd
cmp:395
Code:532682

ABG Shipyard (ABG) reported revenues slightly ahead of estimates at Rs5,717m, a growth of 3% YoY and 13% QoQ. The sequential improvement was on account of better utilization of expanded capacities as execution for existing orders remained on track. EBITDA margins came in at 22.5%, an improvement of 320bps compared to Q1FY12. PAT grew 21% QoQ to Rs484m, although, down 14% on a YoY basis.Although no new order was bagged in Q2FY12, the company’s order book position continues to remain strong, with the unexecuted order book standing at Rs99.2bn as on September 30, 2011, providing it a visibility of ~5 years (based on FY11 revenues). The company delivered three vessels during the quarter, taking the H1FY12 tally to six vessels.Net debt at the end of H1FY12 for ABG increased by ~Rs3.3bn compared to the end of FY11. This was mainly on account of increased working capital requirements to the tune of ~Rs3.8bn during H1FY12. Consequently, debt-equity ratio stood at 1.6:1 as compared to 1.5:1 as on FY11; however, still at a comfortable level.The company currently trades at EV/ EBITDA of 7.4x FY12 and 5.6x FY13. Accumulate for a price target of Rs445.