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Great Offshore – BUY Indiainfoline

October 21, 2007

Indiainfoline Equity Research recommends a BUY in Great Offhsore Ltd with a price Target of Rs 1,029. Key points for the recommendation are as follows,

Great Offshore Ltd (GOL) reported 19.9% yoy growth in net sales to Rs1,523mn in Q2 FY08 as against Rs1,271mn in Q2 FY07. The jump was primarily on account of higher number of vessels operational. Other income jumped from Rs9mn in Q2 FY07 to Rs173mn in Q2 FY08 on account of implementation of AS-11 with effect from April 1, 2007.

GOL has a presence across the entire offshore value chain via its fleet composition of two drilling vessels, 23 offshore logistics vessels, two fire fighting vessels, 11 harbour tugs and one construction barge. Focus on the EPC business has become a part of the company’s business strategy only in the recent past. Currently, the company has an order book of Rs600mn, which is to be executed over a period of six to eight months. With huge investments lined up in domestic E&P sector, there could be increased order flows for the company. Expect GOL to earn revenues close to Rs800mn in FY08 from EPC segment.

EPS estimate for FY09 is Rs 73.5. BUY with a target price of Rs1,029.

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