Buy Shiv Vani Oil, target of Rs 725: Sharekhan

Sharekhan has maintained its buy rating on Shiv Vani Oil & Gas Exploration Services with a revised price target of Rs 725 in its May 8, 2008 research report. "Shiv-Vani Oil & Gas Exploration (Shiv-Vani) has reported an excellent top line growth of 63.3% in its consolidated revenues to Rs 178.5 crore for Q5FY2008. The growth was achieved on the back of strong realisation and higher revenue contribution of the coal bed methane project. The company plans to spend close to Rs 650 crore in FY2009 as it looks to add six more rigs by July 2008, taking the total number of rigs to 32. Further, the number would be increased to 40 rigs by the end of the year."

"The company continues to have a strong order book of Rs 3,500 crore at the end of the financial year. Strong investment in the exploration and production sector and continued high oil prices should be a positive for Shiv- Vani, which is also adding its asset base to cater to this strong demand. To factor in this, we raise our FY2009 profit estimate by 1.3% to Rs 161 crore and FY2010 profit estimate by 15% to Rs 241 crore. At the current market price of Rs 630, the stock discounts at 13x its FY2010E earnings and is quoting at an enterprise value/earnings before interest, depreciation, tax and amortisation of 8.1x. We maintain our Buy recommendation with a revised price target of Rs 725," says Sharekhan's research report.

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