Oil Country Tubelar (Code : 500313) (Rs. 49.00)
Hyderabad based OCTL is one of the leading companies producing a range of products for Oil Drilling and Exploration Industry. Its product range covers drill pipe, heavy weight drill pipe, drill collars, production tubing, casing, tool joints, couplings etc. OCTL has been assessed and certified by APIQR. Scrip is being recommended due to buoyant demand from user industry and OCTL, a debt-free company, is reporting excellent nos.
Company had improved its performance significantly in 2007-08 with sales of 340 crs. as against Rs. 262 crs. in 06-07. Exports during the year were Rs. 254 crs. as against Rs. 104 crs.in 06-07, a rise of 145%. Company had sold 4043 tonnes of Casing Pipes, 1262 tonnes of Production Tubing and 10787 tonnes of Drill Pipes. During the year company fully paid Principal amounts of term loan and funded interest to IFCI and ICICI. An amount of Rs. 13 cr. was paid to IDBI towards full and final settlement of FITL outstanding. Thus, company became debt-free. Current Performance :- Company has been performing extremely well. For 9 months, its sales stand at 267 crs. as against 235 crs. in corresponding figures of previous year. However, PBT increased by 100% to 73.45 crs. Despite much higher tax provision, PAT has gone up by 50%. EPS for 9 months is 11.95 For 08-09, OCTL is likely to achieve sales of Rs. 415 crs. and PAT of Rs. 74 crs. It will translate into EPS of Rs. 16.70. Scrip (debt-free company) is available at just 2.87 x FY09E EPS. Company is also likely to declare maiden dividend of 25%. For 09-10, company is likely to achieve EPS of 19.40. Company is planning to expand its production capacities. However, details of same are not yet available.
Valuations: Scrip is available at (1) 0.50 x FY09E sales., (2) 2.87 x FY09E EPS. (3) 2.47 x FY10E EPS. Promoters have been increasing their stake through open market purchase. Considering that OCTL is supplying its products to Oil Drilling Industry, it has bright prospects and deserves
better valuations. If, scrip gets modest P.E. Ratio of 5, based upon FY09 EPS, its share price should be Rs. 83/-. Share price has been lying low due to low profile of the promoters. However, once 08-09 results are announced on 24th April, OCTL should catch attention of the investors and P.E. expansion should take place. Investors can buy this scrip as share price can appreciate minimum 50% in short term, if sensex remains stable.
Source: Internet (Smart Investment)