Multi Bagger: Shiv-Vani Oil & Gas Exploration Recommended Price 140.00
PN Vijay, Portfolio Manager Report Dated: Jan 01, 2009
Company Profile:Incorporated in 1989, Shiv-Vani has rapidly evolved to emerge as a key player in the upstream sector of the hydrocarbon industry. It went public in 1993. Headquartered in New Delhi, the company offers a wide spectrum of services in the field of oil and natural gas exploration and production. It provides short-hole drilling services to ONGC and it is globally recognized for its proven expertise in exploration, production and allied services. It provides a complete suite of onshore activities and offshore operations. It is the only integrated CBM (Coal Bed Methane) services provider in India and successfully pioneered horizontal and directional drilling in the country to enhance CBM procurement.Financial Position:In Financial year ending 31st Mar 08 (company has changed the year to 31st March from 2008), Shiv-Vani’s net revenue grew by an impressive 107.33% from Rs 276.8 crore to Rs 574 crore (15 Month ending 31st December 2006. This was due to high order inflows during the period, which was supported by increased fleet base and high realizations. The EBIDTA grew by 129.2% to Rs 222 crore. The net profit also increased by 190% to Rs 107.5 crore from Rs 37 crore. Even though the interest costs and total expenses in FY’08 were higher, the net profit showed excellent improvement due to high operational income. The expenses and raw material cost as a percentage of sales declined in 2008. Other operational expenses as a percentage of sales also showed a decline during the period under review.During this financial year also, Shiv-Vani has continued its growth trajectory. For the second quarter FY’09 net sales grew by 92.4% to Rs 187.24 crore from Rs 97.34 crore in the second quarter FY’08. The EBIDTA also showed an increase of 148% to Rs 90.81 crore. The net profit increased by 140.5% to Rs 47.58 crore from Rs 19.78 crore.FCCB Conversion:The entire FCCBs (Foreign currency Convertible Bonds) issue of USD 55 million (except USD 0.5 Million equivalent to 500 Bonds were redeemed) got converted into 92,08,356 Equity Shares. As on 31st March 2008, there were no outstanding FCCBs for conversion/ redemption. Due to conversion of FCCBs, the net worth of the Company has increased by Rs 250.31 crore during the period. The company has allotted 60,00,000 warrants on 29th March, 2008, convertible into equal number of Equity Shares in the company within 18 months from the date of allotment.The shareholders funds stood at Rs 655 crore as on 31st March 2008. The secured loans and the unsecured loans are Rs 732 crore. The Debt equity is more than 1.
PN Vijay, Portfolio Manager Report Dated: Jan 01, 2009
Company Profile:Incorporated in 1989, Shiv-Vani has rapidly evolved to emerge as a key player in the upstream sector of the hydrocarbon industry. It went public in 1993. Headquartered in New Delhi, the company offers a wide spectrum of services in the field of oil and natural gas exploration and production. It provides short-hole drilling services to ONGC and it is globally recognized for its proven expertise in exploration, production and allied services. It provides a complete suite of onshore activities and offshore operations. It is the only integrated CBM (Coal Bed Methane) services provider in India and successfully pioneered horizontal and directional drilling in the country to enhance CBM procurement.Financial Position:In Financial year ending 31st Mar 08 (company has changed the year to 31st March from 2008), Shiv-Vani’s net revenue grew by an impressive 107.33% from Rs 276.8 crore to Rs 574 crore (15 Month ending 31st December 2006. This was due to high order inflows during the period, which was supported by increased fleet base and high realizations. The EBIDTA grew by 129.2% to Rs 222 crore. The net profit also increased by 190% to Rs 107.5 crore from Rs 37 crore. Even though the interest costs and total expenses in FY’08 were higher, the net profit showed excellent improvement due to high operational income. The expenses and raw material cost as a percentage of sales declined in 2008. Other operational expenses as a percentage of sales also showed a decline during the period under review.During this financial year also, Shiv-Vani has continued its growth trajectory. For the second quarter FY’09 net sales grew by 92.4% to Rs 187.24 crore from Rs 97.34 crore in the second quarter FY’08. The EBIDTA also showed an increase of 148% to Rs 90.81 crore. The net profit increased by 140.5% to Rs 47.58 crore from Rs 19.78 crore.FCCB Conversion:The entire FCCBs (Foreign currency Convertible Bonds) issue of USD 55 million (except USD 0.5 Million equivalent to 500 Bonds were redeemed) got converted into 92,08,356 Equity Shares. As on 31st March 2008, there were no outstanding FCCBs for conversion/ redemption. Due to conversion of FCCBs, the net worth of the Company has increased by Rs 250.31 crore during the period. The company has allotted 60,00,000 warrants on 29th March, 2008, convertible into equal number of Equity Shares in the company within 18 months from the date of allotment.The shareholders funds stood at Rs 655 crore as on 31st March 2008. The secured loans and the unsecured loans are Rs 732 crore. The Debt equity is more than 1.
Investment Positives: Shiv-Vani is the biggest private sector rig owner & operator in India specializing in onshore and offshore operations. It has lined up a fleet of 21 onshore rigs (one of the largest in India after ONGC), four seismic data acquisition equipment; four crew boats; seven compressors; 233 drilling rigs and 425 logistic support vehicles. It is one of the few companies in India to own an onshore rig equipped with Top Drive System.Shiv-Vani has joined hands with the Energy Sector world leaders in Russia, USA, China, Malaysia, UAE, Canada, Germany and other countries.It has an order book of Rs 4800 crore out of which Rs 4100 crore is executable over a three-year period. For executing this order book, the company is likely to incur a capex of Rs 600 crore in FY09. It has enough funding for this.Rise in the prices of rig in the coming years will help the company to earn more revenues in its contracts as it has acquired rigs at lower prices.
Concerns: Weakening of the Rupee and delay in order execution will affect profitability. But the Company has an excellent track record in executing orders.The somewhat high level of debt raises some concerns though the FCCBs have all got converted.
During the early months of 2008 Shiv-vani outperformed Nifty. The fall in the price of Shiv-Vani was less than the fall in Nifty and the rise in the price of the stock was greater than the Index. From September the stock has fallen to a great extent, making the share undervalued. Taking into account the prospects of the company the share is a good buy at the current price.
Valuation: Shiv-Vani has shown a superlative financial performance for the FY’08. It is expected to have an annualized EPS of around Rs 43.36 per share for FY09. At CMP of Rs 140, it trades at an attractive P/E of 3.23. The PEG ratio comes to 0.023. We recommend the stock as an excellent investment with a target price of Rs 400 in 12 months.
Source: Internet (Poweryourtrade.com)
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