Monday, January 19, 2009

ML cuts ABG Shipyard's price from Rs 810 (Post split ) to Rs 42/sh After split

Merrill Lynch has cut price objective on ABG Shipyard by almost 95% to Rs 42 from Rs 810. This is a classic case where a brokerage house has taken a complete u-turn.

On January 16 Merrill Lynch downgraded ABG due to Underperformance where the price target was cut to Rs 42 per share that was Rs 810 per share earlier. The brokerage firm feela that the worst is yet to come and it forecasts a 59% decline in FY10e EPS; 96% decline is seen in FY11e driven by decline in revenue and margins. Merrill Lynch feels that 50% orders of ABG Shipyard will be cancelled. The company said that valuation de-rating is owing to erosion in equity value on non-receipt of government subsidy and down cycle.


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