ABG Shipyard (ABGSHI) - ICICI Direct
ABG Shipyard (ABGSHI) - ICICI Direct
ABG Shipyard (ABGSHI) - ICICI Direct
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Exhibit 15: Shipbuilding Index<br />
1000<br />
800<br />
Index<br />
600<br />
400<br />
Globally, the shipbuilding industry is reeling under a dwindling order<br />
book and cancellation of prevailing orders. Further, the industry is under<br />
significant liquidity crunch as major financial institutions reduce their<br />
exposure to the sector. <strong>ABG</strong> <strong>Shipyard</strong> with its unexecuted order book of<br />
~| 10000 crore provides revenue visibility for four years. Also <strong>ABG</strong><br />
bagged a repeat order to building cadet training ship from Indian Navy in<br />
Q3FY13 reinforcing its ability and patronage from elite clients like Navy<br />
and SCI. These factors provide comfort to the company in terms of<br />
sustainability of future revenue.<br />
200<br />
0<br />
Jan-10<br />
Jul-10<br />
Jan-11<br />
Jul-11<br />
Jan-12<br />
Source: Company, <strong>ICICI</strong>direct.com Research<br />
Jul-12<br />
Jan-13<br />
Global shipbuilding industry woes continue, with waning<br />
order book and drying up of financing options. The index<br />
remained flattish in Q3FY13<br />
<strong>ABG</strong> <strong>Shipyard</strong>’s concern pertaining to working capital management<br />
remains unabated coupled with a slowdown in execution due to strained<br />
cash flow. We have rolled over to FY15E valuation and valued the stock at<br />
1.0x FY15E P/BV to arrive at a target price of | 349. We maintain our<br />
HOLD rating on the stock.<br />
Exhibit 11: Valuation parameter<br />
Valuation based Global average Target multiple Target price (|)<br />
Price to book v 1.68 1.0 349<br />
Target price (|) 349<br />
Current market price (|) 369<br />
Upside (%) (5)<br />
Source: <strong>ICICI</strong>direct.com Research<br />
Exhibit 12: Valuation<br />
Sales Sales EPS EPS PE EV/EBITDA RoNW RoCE<br />
(| cr) Growth (%) (|) Growth (%) (x) (x) (%) (%)<br />
FY13E 2251.6 -8.9 22.2 -39.1 16.6 4.4 11.1 19.4<br />
FY14E 2398.1 6.5 25.6 15.2 14.4 4.0 11.6 20.6<br />
FY15E 2493.1 4.0 26.5 3.6 13.9 3.6 11.1 21.8<br />
Source: Company, <strong>ICICI</strong>direct.com Research<br />
Exhibit 13: Revised estimates<br />
Old<br />
New<br />
(| cr) FY14E FY15E FY14E FY15E<br />
Sales 2854.3 0.0 2398.1 2493.1<br />
EBITDA 835.9 0.0 667.5 704.3<br />
Net Profit 174.8 0.0 130.5 135.1<br />
EPS 34.3 0.0 25.6 26.5<br />
Source: Company, <strong>ICICI</strong>direct.com Research<br />
Exhibit 14: Assumptions<br />
FY14E<br />
FY15E<br />
Order book execution rate % 21.50 23.50<br />
Susidy accounted 2.67% 2.68%<br />
Dollar Rupee Exchange rate 54 54<br />
Source: Company, <strong>ICICI</strong>direct.com Research<br />
<strong>ICICI</strong> Securities Ltd | Retail Equity Research Page 5
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