Buy Shiv Vani Oil; target of Rs 483: JRG Securities

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Buy Shiv Vani Oil; target of Rs 483: JRG Securities

JRG Securities is bullish on Shiv Vani Oil & Gas Exploration Services (SVOG) and has recommended buy rating on the stock with a target of Rs 483 in its December 2, 2010 research report.

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JRG Securities is bullish on Shiv Vani Oil & Gas Exploration Services (SVOG) and has recommended buy rating on the stock with a target of Rs 483 in its December 2, 2010 research report.

"Shiv-Vani Oil and Gas Exploration Services Limited or "SVOG" is present in the upstream sector of the hydrocarbon industry and is a key player in the domestic oil and natural gas exploration and production space. Over the past two decades the company has gained immense experience in the onshore and offshore operations, as well as in natural gas compression & allied services wherein some of its work areas include shot hole drilling, seismic surveying, directional drilling, well development, downhole operations and engineering & logistics."

"During the previous year, SVOG registered a more than 44% rise in its Total Income to Rs 12564 Mln while the EBITDA accelerated by more than 70% to Rs 5593 Mln. The Operating margins too expanded by around 500 bps to 44.7%. Though the company has recorded strong financial and operating growth over the past many years, it recorded a muted financial growth in the Sep 10 quarter. Its consolidated Net Sales dipped by nearly 10% o Rs 2882 Mln while the Operating Profit dropped by 5.5% to Rs 1307 million. Despite a decent performance on the EBITDA front, its Bottom-line slumped by more than 42% to Rs 326 million mainly due to the an almost doubling of interest costs of the company to Rs 795 million. On a Standalone basis, the performance was even lower wherein the company reported Net Loss of Rs 78 million whereas the Net sales declined by 6% to Rs 2471 million. The silver lining is, the management is still confident of clocking a Top-line of over Rs 15000 million though they have lowered the Netprofit guidance to Rs 2300-2500 million from over Rs 2500 million earlier."

"SVOG is expected to be a strong beneficiary of the large scale investment opportunity for E&P of crude oil, gas and CBM in India primarily led by the NELP programs by the GoI and huge investment by state owned ONGC and OIL for strengthening their oil & gas reserves. Moreover, SOVG's more than Rs 30,000 Mln (2.4X FY 10 Net Sales) worth of Order book provides a healthy visibility for its future financial performance. We recommend a "Buy" rating on the stock with a target price of Rs 483 in Twelve months," says JRG Securities research report.

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To read the full report click on the attachment