Bharati Shipyard has relatively lower revenue visibility in terms of its current order book, which stands at just 1.4 times its 200910 revenue. However, it is looking for new orders worth about 1,000 crore from the defence and offshore sectors over the next one year. The company's acquisition of 49.7 per cent stake in Great Offshore gives it presence in the offshore business. However, this has also led to higher debt of `2,300 crore or 2.6 times its equity, because of which in 2010-11 its interest costs are estimated to more than double to `235 crore. The flow of new orders and high debt are also among the crucial things to monitor. However, analysts like the stock because of low valuations and its stake in Great Offshore. ABG's stock is trading at about four times its standalone one-year forward earnings. Additionally, its stake in Great Offshore is valued at about `100 per share.
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