Dolphin Offshore eyes mega deals

Stock Has Risen 275% In The Past One Year Against 50% Gains Logged By Sensex

THE shares of Mumbai-based Dolphin Offshore have significantly outperformed the market over the past one year — logging a gain of 275% against Sensex’s 50%. The scrip, which was underperforming the market in the first four months of 2009, got a boost when the company announced a bonus issue in May 2009. It has consistently outperformed since then. Although, in the recent market weakness post-Diwali, the scrip has fallen more than the Sensex, it remains substantially above its year ago level.
The company is now being valued at 11.7 times its earnings for the past 12 months. Dolphin’s poor performance for the September 2009 quarter too impacted its stock price. Its profit for the September 2009 quarter slipped 5% against the year ago period to Rs 11 crore as the turnover remained almost flat at Rs 66 crore. The September quarter has traditionally been off-season for Dolphin, as offshore construction work in India has to be suspended for monsoon. To keep its assets working, the company last year undertook contracts in China and Malaysia during these months — something which it could not repeat this year.
The company traditionally works as a sub-contractor on various ONGC offshore projects. However, last year it was able to register as the main EPC contractor with ONGC and bagged two contracts worth Rs 316 crore. This shift not only indicates at bigger-ticket contracts in future, but also an increase in margins. As a result, Dolphin’s profits for FY09 spurted 160% against previous year despite writing off nearly Rs 40 crore of outstanding debts. The company is currently executing projects worth Rs 380 crore — 10% higher than its turnover for FY09. ONGC, which is its principal customer, is in the process of awarding contracts of over $1 billion for laying new pipelines and setting up new platforms in its Bombay High field. Fighting hard domestic and international competition, Dolphin is eyeing these tenders to fuel its future growth.