Sharemasterindia.com: Aban Offshore India's largest offshore drilling services provider - shares are on fire following the announcement of the Iran nuclear deal. The stock closed 16 per cent higher on Tuesday and was up another 5 per cent today, hitting an intraday high of Rs 338.60.
Analysts say easing of sanctions in Iran post the nuclear deal will help Aban Offshore, which gets around 35 per cent of its revenues from the country. Aban Offshore has reportedly deployed 5 rigs in Iran and due to existing sanctions, these rigs have not been fully utilized, analysts say.
However, Deutsche Bank in a note said that Aban Offshore could be negatively impacted because of the Iran deal. The brokerage says removal of sanctions could open up the Iranian rig market to global competition, which will result in lower rental yields for the rigs.
Deutsche Bank on Wednesday cut Aban Offshore's FY16 and FY17 earnings per share estimates by 5 and 7 per cent, respectively. The brokerage cut its price target on Aban Offshore by 12 per cent to Rs 360.
Prakash Diwan, director at Altamount Capital Management, says those who are already invested in Aban Offshore should hold on to their investments for some more upside, but fresh investment should not be made at this level.
As of 10.02 a.m. Aban Offshore shares traded 4.58 per cent higher at Rs 336.55 apiece, outperforming the broader Nifty, which was up 0.67 per cent.
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