Enter in Interlink Petro around Rs 30: A Chugh

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Enter in Interlink Petro around Rs 30: A Chugh

Investment Analyst, Ashish Chugh is of the view that one can enter in Interlink Petroleum at around Rs 30.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Ashish Chugh See what other Experts & Brokerages are saying about Interlink Petro See messages about Interlink Petro BSE | NSE 01/01/70 Are Mutual Funds betting on ? Other Stocks in this news Oil and Natural Gas Corporation |

Investment Analyst, Ashish Chugh is of the view that one can enter in Interlink Petroleum at around Rs 30.

Chugh told CNBC-TV18, "Before I talk about Interlink, I would like to give a cautionary statement this stock trades in a Z Group of Bombay Stock Exchange (BSE) and investors should keep that in mind before they make investment in this stock.

"Interlink Petroleum is it's an oil company based in Gujarat. This company was allotted two-fields in the mid-90s. These are Modhera Oil Field and Baola Gas Field because of paucity of funds with the promoters; the old promoters were never able to exploit these fields commercially. Both these fields are located in the Cambay Basin and both are proven fields."

"This company has recently seen a change in the management. The company recently allotted about 1.2 crore shares to a Singapore company called Jit Sun Investments. If you dig deep into the Jit Sun Investments and the ownership pattern of this company, Jit Sun Investments is owned by a company called Ezra Holdings Limited. Ezra Holdings Limited is a company, which is listed in Singapore, they are into oil and gas sector and they provide support services in the oil and gas sector. They are into offshore support services and marine services and listed on the Singapore Stock Exchange."

"Ezra Holdings has got revenues of about 220 million Singapore dollars. They made a Profit After Tax (PAT) of about 100 million Singapore dollars. They command a marketcap of about 1,100 million Singapore dollars and they came out with an IPO in August 2003 and the current stock price is about 15-times the IPO price. So this company in terms of its revenues and profitability as well as in terms of the stock price has seen substantial growth over the last three-four years."

"What will happen to Interlink Petroleum after infusion of funds by Ezra Holdings is that firstly they will be able to commercially exploit the fields which have not been exploited till date maybe we may see commercial production of oil and gas from these two fields. Second is Ezra Holdings may use Interlink Petroleum as a vehicle for increasing their commitment and increasing their business in India. The other things, which give a lot of confidence about the commitment of Ezra Holdings towards the Indian market is that this company has appointed senior people from the oil and gas industry, also the Former Chairman and Managing Director of Oil and Natural Gas Corporation (ONGC) Mr. B C Bora on the Board of this company."

"So all in all at this current marketcap of Rs 70 crore the stock may look to be overpriced given the revenues, which are zero for this company but the way things are happening in this company, the fact that they will be able to now exploit their fields, which have been allotted to the company. Also the fact that senior people from ONGC and also their Former Chairman and Managing Director has joined this company give a lot of confidence about the future of this company." 

"Another thing, is the stock has seen a run up over the last week or ten-days so rather than buying the stock on circuit maybe investors can keep this at the back of their mind and around Rs 30 would be a good level to maybe enter into this stock."

Disclosure: Analyst has vested interest in the above company.