Valuable Stock for 2018- Aban OffshoreLimited (AOL)

Aban OffshoreLimited (AOL) was established in the year 1986 by M.A. Abraham, India's largest offshore drilling contractor in the private sector and ISO 9001:2000 accredited company offering world-class drilling and oil field services for offshore exploration and production of hydrocarbons to the oil industry in India and abroad. AOL currently possesses twenty offshore drilling and production units, it owns and operates several offshore drilling rigs, drill ships, and a floating production facility, 'Tahara'. The services offered by the company are Exploratory Services, Drilling Services, Production of hydrocarbons and Manning and management. Aban Offshore Ltd provides offshore drilling & production services to companies engaged in exploration, development & production of oil & gas both in domestic & international markets. It also owns & operates wind turbines for generation of wind power. Mission  
  • The Company will be recognized as global leaders, by offering our clients superior service, including experienced, suitable trained and motivated personnel, superiors, reliable and efficient equipment with environmentally-friendly operations. 
  • The Company will achieve leadership status by actively encouraging our employees to attain the highest standards of the ethics, honesty and integrity. 
  • The Company will foster pride, enthusiasm, creativity and team work to ensure trust and confidence in our employees, clients and suppliers. 
  • The Company will actively grow Aban through financial discipline and cost-effective asset management to deliver superior returns to our clients and shareholders. 
The Company will actively support and emphasize ‘zero tolerance’ to unsafe working practices and conditions, by utilizing and implementing the best industry standards in our operations at all times. 

Fundamental Analysis 
The Company reported an EBIDTA of Rs. 9,270.70 million but a net loss of Rs. 10,578.54 million. The fact that the Company stayed EBIDTA-positive in a difficult environment validates that Aban Offshore still remains one of the most cost-competitive rig service providers in the world. Until then, the Company will seek to strengthen its business model and increase its profitability. The biggest profitability driver of rig service providers is the price of crude oil. The higher the oil price, the better the viability of oil exploration and processing companies, the greater their reinvestment into drilling and the greater their need to lease drilling rigs from service providers. In this context, the one big development during the year under review was a substantial rebound of the international crude oil price from a low of around US$28 per barrel to the prevalent US$50 per barrel. However, it indicate that this substantial recovery was not mirrored in an improvement in rig rentals. 
  • Global growth was projected to slow to 3.1% in 2016 (before recovering to 3.4% in 2017). This reflected a subdued outlook following the Brexit referendum and weaker-than-expected growth in the US. 
  • Investments, which are readily realizable and intended to be held for not more than 6 months from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments. 
  • India’s economic growth was indicated at 6.6% for FY 2017, down from 7.6% recorded in the FY 2016. The principal development of the year was the country’s currency demonetisation, affecting growth by 100 bps. In the recent past, India’s performance has been backed by policy reforms,attracting investments. 
  • Commodity markets were volatile through 2016. The year began on a disappointing note with crude oil prices plummeting to a multi-year low of ~US$30 per barrel due to a demand supply mismatch. 
Technical Analysis 
The stock recovered from its monthly support level of 161, it has touched this low in August 2017. Since then the stock recovered nearly 35 percent. The stock is in tight consolidation range since last 7 to 9 weeks forming a channel line pattern. If we draw a Fibonacci Retracement from the Monthly low 142.55 made in February 2016 to the all-time of 5416 it is observed that it has recovered from 50.50% of this swing. A strong break out of double bottom chart pattern is expected this month with high volume. 
  • Break out of the higher low higher high pattern is confirmed above 210 
  • 100 day EMA also formed and strong resistance near 230 on daily chart and hence break out above this resistance is expected to be powerful 
  • It may face a resistance of weekly trend line drawn from its life-time highs, the resistance would be around 230. 
  • RSI on Weekly chart also near 50 and if moves above it will confirms the break out 
  • 230-232 is the key support and should not be breached, further 200 and 190 is the 2nd key support. 
Supports and Resistance (Monthly) 
  • Resistance 1- 452 Supports 1- 228 
  • Resistance 2- 366Support 2- 176 
  • Resistance 3- 314Support 3- 140 
Aban OffshoreLimited (AOL) Weekly Chart
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