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Buy Aban Offshore, target of 1923: KRChoksey

By SiliconIndia   |   Friday, October 30, 2009   |    2 Comments
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Bangalore: With the expectation of increase in its revenues in the coming months, KRChoksey has recommended a buy rating on Aban Offshore with a target price of Rs. 1923. According to the brokerage, when economic activity picks up, it won't take much time for demand to outpace the supply, as it is easier to increase usage, but it takes a long time to ramp up production. Aban Offshore is engaged in providing drilling oil field services for offshore exploration and production of hydrocarbons to the oil industry in India and abroad. The company's primary segments are offshore oil drilling and production services and wind power generation. The company has 20 offshore assets including 15 jack-up offshore drilling rigs, two drill ships, one floating production platform and a jack-up rig and drill ship each on bareboat charter. According to KRChoksey, a lot of investment is expected in the exploration and production activities in the next few years. The deployment of the rigs would help the Aban to generate higher cash flows to service its huge debt, says KRChoksey. KRChoksey believes that the performance of Aban in the second half of the year would be better on account of deployment of rigs, which coupled with debt restructuring initiatives would help the company improve its cash flow situation. With the recommended target price if the stock is bought at Thursday's closing price of Rs. 1,335.40, the percentage of gain would be 44 percent.
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