Hold Selan Explore; target of Rs 361: Firstcall Research

Firstcall Research has recommended hold rating on Selan Exploration Technology with a target of Rs 361 in its September 24, 2012 research report. The Research firm expect that the company surplus & deficit scenario is likely to continue for the next two years, will keep its growth story in the coming quarters also.

“Selan Exploration Technology Limited (SELAN) is a private sector listed company, incorporated in 1985, engaged in oil exploration and production since 1992. The Promoters and Management have extensive experience and domain knowledge in the field of Petroleum Exploration, Development and Production as well as in the field of Geophysical Data Acquisition, Processing and Interpretation. Following the move by the Government of India in 1992 in opening up the oil sector for private initiative in exploration and production of Hydrocarbons, SELAN was amongst The first private sector companies to have obtained rights to develop three discovered oilfields situated in the state of Gujarat namely Bakrol, Indrora and Lohar, all with proven oil and gas reserves. SELAN was subsequently awarded two more fields in Gujarat namely Ognaj Oilfield and Karjisan Gas field.”

“Selan Exploration Technology Limited (SELAN) is a private sector listed company & engaged in oil exploration and production, reported its financial results for the quarter ended 30 June, 2012. The first quarter witnesses a healthy increase in overall sales but slightly slept in profit on account of the selling price of crude oil is determined at the prevailing international market rates in US Dollars. The company’s net profit slept to Rs. 127.90 million against Rs. 129.40 million in the corresponding quarter ending of previous year, and decrease of 1.16%. Revenue for the quarter rose 10.68% to Rs. 270.40 million from Rs. 244.30 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.7.53 a share during the quarter, registering 1.16% increase over previous year period. Profit before interest, depreciation and tax is Rs. 196.80 millions as against Rs.204.70 millions in the corresponding period of the previous year.”

“At the current market price of Rs.320.00, the stock P/E ratio is at 10.27 x FY13E and 9.11 x FY14E respectively.  Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.31.17 and Rs.35.14 respectively.  Net Sales and PAT of the company are expected to grow at a CAGR of 19% and 23% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 6.75 x for FY13E and 6.06 x for FY14E. Price to Book Value of the stock is expected to be at 2.09 x and 1.70 x respectively for FY13E and FY14E. The first quarter witness a healthy increase in sales & slightly slept in profit on account of selling price of crude oil is determined at the prevailing international market rates in US Dollars. Fluctuations are the international price of crude oil and Dollar vs. Rupee Exchange rates. We expect that the company surplus & deficit scenario is likely to continue for the next two years, will keep its growth story in the coming quarters also. We recommend hold in this particular scrip with a target price of Rs.361 for Medium to Long term investment,”

“At the current market price of Rs.320.00, the stock P/E ratio is at 10.27 x FY13E and 9.11 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.31.17 and Rs.35.14 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 19% and 23% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 6.75 x for FY13E and 6.06 x for FY14E. Price to Book Value of the stock is expected to be at 2.09 x and 1.70 x respectively for FY13E and FY14E. The first quarter witness a healthy increase in sales & slightly slept in profit on account of selling price of crude oil is determined at the prevailing international market rates in US Dollars. Fluctuations are the international price of crude oil and Dollar vs. Rupee Exchange rates. We expect that the company surplus & deficit scenario is likely to continue for the next two years, will keep its growth story in the coming quarters also. We recommend hold in this particular scrip with a target price of Rs.361 for Medium to long term investment,” says Firstcall Research report.

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