Aban Offshore - Bond redemption comes at a steep cost - Emkay

Aban Offshore redeems bonds worth $160 mn - financed through internal accruals (USD40 mn) & fresh bond issue (USD120mn) Coupon rate at 12% significantly higher than estimates of 9%.

Aban's next repayment obligation of USD157 due in Mar-12 could also be on similar lines – Downgrade FY13 EPS by 11.4%.

Though Aban boasts of contracted revenue backlog of ~$1.9 bn over FY12-15E, revenue visibility stands at 65% for FY13 as 6 jack up rigs are due for contrat renewal in H2FY13.

Lower target to Rs485 (Rs522 earlier) led by the earnings downgrade. We also lower rating from BUY to ACCUMULATE led by sharp 30%+ run up in the stock price.

The Aban Offshore stock was trading at Rs.439.15, down by Rs.1.25 or 0.28%. The stock hit an intraday high of Rs.454.85 and low of Rs.435.50.

The total traded quantity was 3.26 lakhs compared to 2 week average of 2.08 lakhs.

Source : Equity Bulls

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