Sharekhan puts 'buy' on Aban Offshore; target Rs 4829

MUMBAI: Sharekhan has maintained ‘buy’ on Aban Offshore for a target price of Rs 4,829, an upside of 93.6 per cent. Aban Offshore, one of the largest oil drilling companies in Asia, is benefiting from increased oil exploration and production activities globally. The resulting robust demand environment is leading to firm day rates for the company’s assets.

In addition to re-pricing of its assets at higher day rates, the company is also benefiting from the efforts taken to substantially ramp up the asset base through organic and inorganic initiatives.

Sharekhan expects the company to receive three jack-up rigs in the next couple of quarters, which would significantly improve its financial performance going forward. The company is also looking to raise capital, which the brokerage views as positive, as it would result in reducing the high debt levels of the company.

At the market price the stock trades at 7.1x FY2009 and 5.2x FY2010 estimated earnings.