Aban Offshore spurts after ratings upgrade from CARE

Aban Offshore surged 12.56% to Rs 470.35 at 12:18 IST on BSE after rating agency CARE revised credit rating of bank facilities of Aban Offshore by 3 notches to BB- from D.

Meanwhile, the S&P BSE Sensex was up 236.97 points or 0.87% at 27,478.75.

The stock surged on heavy volumes. On BSE, so far 11.13 lakh shares were traded in the counter as against average daily volume of 2.94 lakh shares in the past one quarter.

The stock hit a high of Rs 474 and a low of Rs 418.05 so far during the day. The stock had hit a 52-week high of Rs 939.90 on 8 July 2014. The stock had hit a 52-week low of Rs 360.95 on 3 January 2014.

The stock had underperformed the market over the past one month till 26 December 2014, declining 29.97% compared with Sensex's 4.03% fall. The scrip had also underperformed the market in past one quarter, sliding 30.88% as against Sensex's 2.31% rise.

The small-cap company has equity capital of Rs 11.37 crore. Face value per share is Rs 2.

Rating agency CARE in its release dated 26 December 2014 noted that the revision in the ratings assigned to the bank facilities of Aban offshore takes into account improvement in capital structure consequent to mobilisation of fresh equity during FY 2014 (refers to the period April 1 to March 31) and first half of FY 2015, improvement in the financial performance during FY 2014 and first half of FY 2015 and completion of refinancing of debt at the group level. CARE said that the ratings continue to be constrained by relatively high leverage at the consolidated level, high debt in relation to cash accruals, high utilization of working capital limits, non-deployment of few of its rigs and inherent risks in the offshore drilling industry. The ratings continued to factor in the strong competitive position of Aban Offshore in the industry, experience of promoters and management, CARE added.

Going forward, timely deployment of rigs going off the contract, optimum deployment of its fleet, changes in day rates, effective cash flow management notwithstanding improvement in liquidity position in the recent past would be key rating sensitivities, CARE said.

Aban Offshore's consolidated net profit jumped 91.5% to Rs 148.75 crore on 1.7% growth in net sales to Rs 1018.49 crore in Q2 September 2014 over Q2 September 2013.

Aban Offshore, the flagship company of Aban group, provides offshore drilling services to companies engaged in exploration and production of oil and gas.

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