ABG Shipyard's revenues (including subsidy income) increased 34% during the quarter to Rs3,709 mn, below estimates. We attribute lower than expected revenues primarily to lower revenue booking on USD480 mn rig order
However, operating profit (including subsidy income) growth was subdued at 10% yoy to Rs1,004 mn – attributed to 570 bps yoy decline in operating margins to 27.1%. Decline in operating margins was primarily due to sharp increase in raw material costs.
Despite lower than expected revenue growth, adjusted net profit for the quarter increased 13.4% yoy to Rs527 mn, ahead our estimates. This is primarily due to lower than expected finance and depreciation charges as well as better than expected operational performance. Earnings for the quarter stood at Rs10.3 per share.
ABG Shipyard's order book for the quarter stands at Rs115 bn, down 12% qoq.
At CMP, the stock is trading at 1.8X FY10E earnings of Rs47.8 per share.
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