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Sunday, December 13, 2009

ABG Shipyard - Stock Analysis

Firstcall India equity research maintains `Buy stocks` on ABG Shipyard with a price target of Rs 242.

The brokerage house pointed out at the current market price of around Rs 200, the stock is trading at a P/Ex of 5.68 times for FY10E and 5.12 times for FY11E.

The EPS of the stock is expected to be at Rs 36.98 and Rs 40.98 for FY10E and FY11E respectively.

On the basis of price to book value, the stock trades at 1.04 times and 0.87 times for FY10E and FY11E respectively.

The net sales and PAT of the company is expected to grow at a CAGR of 23% and 9% respectively over FY08 to FY11E.

The present macro scenario is bleak with erosion in demand for ship yards following a cyclical downturn in the shipping industry.

However, ABG has not faced any cancellations or delays till date. In addition, since a
substantial part of ABG`s order backlog caters to the offshore industry, which has not seen such a steep fall as in case of shipping, it remains relatively insulated.

They recommend to "buy stocks" with a target price of Rs 242 for medium to long term.

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