markettrend766
04-10-2008, 09:24 PM
Emkay Global Financial Services has maintained its buy rating on Aban Offshore, with a price target of Rs 3868, in its report dated October 3, 2008.
"Although the day rate for DD3 at $ 167000 is lower than our expectation of $ 180000, keeping in mind the long term nature of the contract we believe it’s a fair day rate.
At current levels, Aban is discounting its FY2010E earnings by 4.2X, which is a significant discount to the valuations commanded by global drilling majors.
However, we believe that Aban’s valuation does not adequately capture Aban’s steeper earnings growth of 123% CAGR as compared to 17% CAGR for its global peers and its superlative RoE of 48% as compared to 24% for global peers.
At 4.2X FY2010E earnings, Aban’s valuations are extremely compelling and it more than adequately factors possible softening in Jack up day rates.
We continue to believe that the global offshore drilling industry fundamentals are still robust and believe that Aban is the best pick among domestic players.
We maintain our BUY recommendation on the stock with a price target of Rs 3868," says Emkay Global Financial Services' report.
"Although the day rate for DD3 at $ 167000 is lower than our expectation of $ 180000, keeping in mind the long term nature of the contract we believe it’s a fair day rate.
At current levels, Aban is discounting its FY2010E earnings by 4.2X, which is a significant discount to the valuations commanded by global drilling majors.
However, we believe that Aban’s valuation does not adequately capture Aban’s steeper earnings growth of 123% CAGR as compared to 17% CAGR for its global peers and its superlative RoE of 48% as compared to 24% for global peers.
At 4.2X FY2010E earnings, Aban’s valuations are extremely compelling and it more than adequately factors possible softening in Jack up day rates.
We continue to believe that the global offshore drilling industry fundamentals are still robust and believe that Aban is the best pick among domestic players.
We maintain our BUY recommendation on the stock with a price target of Rs 3868," says Emkay Global Financial Services' report.