Great Offshore

Date of report

Tuesday, April 01, 2008

Company

Great Offshore Limited - Quick & Dirty Analysis

Analyst

Dhananjayan J

Contact

[email protected], [email protected]

Table of Contents (Please enable the macro attached to this file)

Fact Sheet

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Quick & Dirty Analysis

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Disclaimer

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FACT SHEET GREAT OFFSHORE LIMITED BSE TICKER: 532786, NSE TICKER: GTOFFSHORE, Exchange: BSE & NSE, MCap: 23368.53 m Great Offshore Limited is an India-based company that is principally engaged in offshore business. The Company is an integrated offshore oilfield service provider offering a range of services to upstream oil and gas producers to carry out offshore exploration and production (E&P) activities. From drilling services to marine and air logistics, from marine construction to port/terminal services and beyond, Great Offshore meets the offshore requirements of an E&P operator. The Company has serviced E&P operators in India, as well as in the international waters of the North Sea, the Middle East, South Africa and South East Asia with its vessels that include exploratory rigs, offshore support vessels, anchor handling tug supply vessels and a construction barge. It also provides port and terminal support services through a fleet of harbor tugs. The Company’s subsidiaries include Great Offshore Fujairah L.L.C. and Deep Water Services (India) Limited.

Website

http://www.greatoffshore.com 

Special situation

10% Buyback

Pro forma valuation Price ratio Price to earnings Price to free cash flow Price to tangible book value Enterprise value ratio EV / Sales EV / EBITDA EV / EBIT EV / (EBITDA-Capex) Debt and interest coverage Net Debt / EBITDA EBIT / Interest expense Yield Ratio Dividend yield Earnings yield FCF1 yield

25.7 NA 3.4 4.8 10.4 15.1 -11.1 3.5 2.4 1.3% 3.9% NA

Return on Assets Return on operating assets Return on capital invested

14.8% 16.6%

Operating margins EBITDA EBIT Net income

45.7% 31.4% 12.2%

Depreciation Vs. Capex

Capex

The above valuation ratios are computed after assuming buyback of shars in the LTM financial numbers published by the company. (Refer QAD sheet)

The above valuation ratios are computed after assuming buyback of shars in the LTM financial numbers published by the company. (Refer QAD sheet)

Conclusion Highly capital intensive as well as acquisitive. Company have historical negative free cash flow. So we believe the stock as have free cash flow support to finance its 10% buyback of shares. For this buyback they got to borrow money. That doe valuation. Hence this special situation of buyback is not attractive. Our Verdict:

Not attractive. Overvalued.

o we believe the stock as overvalued. Company doesn't borrow money. That doesn't make sense to the overall

QUICK & DIRTY ANALYSIS

INCOME STATEMENT

(Amt in lakhs)

CASH FLOW

RATIOS

BALANCE SHEET

9m 12/06 INCOME STATEMENT Charter Hire Miscellaneous receipts Total revenue Operating expenses GROSS PROFIT Margin Administrative & other expenses Miscellaneous income (for 9m- it may include non-recurring items) - excluded EBITDA Margin Depreciation EBIT Margin Interest expense Interest income EBT Tax @ 36.5% Indian corporate tax rate Net income before other items Share of profit from joint venture interest Net income Margin Outstanding shares - as reported EPS

38,755.00 15,534.00 23,221.00 59.9% 3,969.00

19,252.00 49.7% 4,764.00 14,488.00 37.4% 2,263.00 12,225.00 4,462.13 7,762.88 7,762.88 20.0% 381.18 INR 20.37

FY 3/07 56,824.00 49.00 56,873.00 26,449.00 30,424.00 53.5% 4,147.00

26,277.00 46.2% 7,090.00 19,187.00 33.7% 3,606.00 381.00 15,962.00 5,826.13 10,135.87 2.00 10,137.87 17.8% 381.18 INR 26.60

9m 12/07

49,133.00 18,341.00 30,792.00 62.7% 7,052.00

23,740.00 48.3% 7,305.00 16,435.00 33.5% 6,137.00 10,298.00 3,758.77 6,539.23 6,539.23 13.3% 381.18 INR 17.16

LTM 12/07

67,251.00 29,256.00 37,995.00 56.5% 7,230.00 30,765.00 45.7% 9,631.00 21,134.00 31.4% 7,480.00 381.00 14,035.00 5,122.78 8,912.23 2.00 8,914.23 13.3% 381.18 INR 23.39

Note : Nine month results is holding company results on stand alone basis. Consolidated results for 9m ended Dec 2007 is n Other income - non recurring items - excluded Profit on sale of current investments Gain on foreign currency transactions Profit on sale of sundry assets Miscellaneous income (for 9m- it may include non-recurring items) - excluded Note : Share of profit from joint venture interest Revenue Operating expenses Gross profit Administration and other expenses EBIT Interest expenses & tax Share of profit from joint venture interest CASH FLOW Net profit before tax as reported Tax paid Net income Adjustments Depreciation

1.00 362.00 3.00 516.00

40.00 1,346.00 1,269.00 77.00 49.00 28.00 26.00 2.00 16,376.00 2,805.00 13,571.00 7,090.00

1,926.00

Misc expenses written off Profit on sale of investments Profit on sale of sundry assets Provision for doubtful debts Deferred revenue expenditure written off Foreign exchange (A) Changes in working capital Trade & other receivables Inventories Trade payables (B) Cash from operation (A) + (B) Capital expenditure Gross capex Sale of fixed assets Net capex

-59,680.00 26.00 -59,654.00

FCF1 before working capital investment FCF1 after working capital investment

-36,876.00 Where the hell on the world these people will hav -38,529.00

Other investing activities Purchase of investments Sale of investments Total

21.00 -1.00 -3.00 133.00 723.00 1,244.00 22,778.00 -9,598.00 167.00 7,778.00 -1,653.00 21,125.00

-59,654.00

-701.00 702.00 1.00

Amt rised from / (repaid to) shareholders Proceeds from issue of equity shares Dividend paid Total

-3,478.00 -3,478.00

Debt rised/(repaid) Proceeds from long term borrowings Repayments of long term borrowings Total

45,919.00 -8,622.00 37,297.00

BALANCE SHEET Total assets Goodwill Deferred tax assets Cash Adv recoverable in cash and in kind Operating assets Return on operating assets

152,139.00 5.00 329.00 5,688.00 3,479.00 142,638.00 13.5%

152,139.00 5.00 329.00 5,688.00 3,479.00 142,638.00 14.8%

Fixed assets Current assets excluding cash Current liabilities excluding debt Capital invested Return on capital invested

128,866.00 13,105.00 14,927.00 127,044.00 15.1%

128,866.00 13,105.00 14,927.00 127,044.00 16.6%

Cash Debt - note * Shareholder's equity - book value Tangible Book Value (TBV)

5,688.00 74,656.00 61,758.00 61,753.00

16,800.00

5,688.00 91,456.00 61,758.00 61,753.00

TBV / Share Notional FCF1 / share

INR 162.00 -42,426.13

INR 162.00 -41,108.78

Note * During Q3 2007, co has issued Foreign Currency Convertible Bonds (due 2012) on 5th Oct 2007 of US$ 42 million listed in SGX o Convertible at Rs. 875/ per share and yield to maturity (YTM) of 7.25%. RATIOS Price Mcap EV EV/sales EV/EBITDA EV/EBIT EV/(EBITDA-Capex) PE P/FCF1 P/TBV Net debt / EBITDA EBIT / Interest expense Dividend per share Dividend yield Earnings yield FCF1 yield

INR 613.05 233,685.35 319,453.35 4.8 10.4 15.1 -11.1 26.2 NA 3.8 2.8 2.8 INR 8.00 1.3% 3.8% NA

Buyback

Pro forma 12/07

67,251.00 29,256.00 37,995.00 56.5% 7,230.00

1,168.43

38.12

30,765.00 45.7% 9,631.00 21,134.00 31.4% 8,648.43 381.00 12,866.57 4,696.30 8,170.27 2.00 8,172.27 12.2% 343.07 INR 23.82

results for 9m ended Dec 2007 is not declared.

-59,654.00

on the world these people will have money to buyback shares?

152,139.00 5.00 329.00 5,688.00 3,479.00 142,638.00 14.8% 128,866.00 13,105.00 14,927.00 127,044.00 16.6% 23,368.53

5,688.00 114,824.53 61,758.00 61,753.00

INR 180.00 -41,850.73

07 of US$ 42 million listed in SGX on 12th Oct 2007.

613.05 210,316.81 319,453.35 4.8 10.4 15.1 -11.1 25.7 NA 3.4 3.5 2.4 INR 8.00 1.3% 3.9% NA

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