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Sejal Architectural Glass Ltd
Sejal Architectural Glass Ltd
Story:Sejal Architectural Glass is into processing of insulating, toughened and laminated glass. The company also has a trading division which supports various in-house brands and products of other manufacturers. The products include tiles, sanitary-ware, mirrors, glass, etc. for home and commercial interiors.Going forward, the company expects acceleration in its revenue and profit growth, as it continues to book new orders. Its float glass facility will be completed by FY09. Its perday capacity at 100% utilisation is 550 tonnes per day. For the first year, capacity utilisation will be around 65% and by FY11, it will be fully operational.Recently, the company ventured into retailing and has opened a 30,000-square feet showroom to sell high-end glass articles used in house interiors.The Indian glass industry has immense potential to grow as the long term growth story in the construction and automotive industries in India remains intact.The introduction of low-cost cars and the changing focus of real estate developers to semi-urban cities due to high land prices can be major growth drivers.During FY11, the company expects to clock revenues of Rs 350 crore and profit of nearly 50crs.With confirmed orders from Amritsar Airport, Reliance Industries, L&T and Brigade Enterprises among others, the company's growth in the next few quarters seems certain. The stock is currently trading at 6 times its estimated FY10 EPS.It also would be prudent to note that the company just some months ago came with its IPO at a price of 115 and the issue was highly oversubscribed to the tune of 7 odd times.Its now at a 86 rs discount to its ipo price of 115rs.With market sentiments improving now the stock may just shoot up a hell lot from present level .A great buy at present levels.
Sejal Architectural Glass Ltd
Story:Sejal Architectural Glass is into processing of insulating, toughened and laminated glass. The company also has a trading division which supports various in-house brands and products of other manufacturers. The products include tiles, sanitary-ware, mirrors, glass, etc. for home and commercial interiors.Going forward, the company expects acceleration in its revenue and profit growth, as it continues to book new orders. Its float glass facility will be completed by FY09. Its perday capacity at 100% utilisation is 550 tonnes per day. For the first year, capacity utilisation will be around 65% and by FY11, it will be fully operational.Recently, the company ventured into retailing and has opened a 30,000-square feet showroom to sell high-end glass articles used in house interiors.The Indian glass industry has immense potential to grow as the long term growth story in the construction and automotive industries in India remains intact.The introduction of low-cost cars and the changing focus of real estate developers to semi-urban cities due to high land prices can be major growth drivers.During FY11, the company expects to clock revenues of Rs 350 crore and profit of nearly 50crs.With confirmed orders from Amritsar Airport, Reliance Industries, L&T and Brigade Enterprises among others, the company's growth in the next few quarters seems certain. The stock is currently trading at 6 times its estimated FY10 EPS.It also would be prudent to note that the company just some months ago came with its IPO at a price of 115 and the issue was highly oversubscribed to the tune of 7 odd times.Its now at a 86 rs discount to its ipo price of 115rs.With market sentiments improving now the stock may just shoot up a hell lot from present level .A great buy at present levels.
Solar Explosives/industries Ltd
Solar Explosives/industries Ltd
Story:Solar explosive is one of the largest explosives and explosive-initiating devices manufacturer in the world.It posses one of the most modern integrated explosive manufacturing facility.It buys ammonium but manufactures other raw materials in-house.The backward integration helps it to cope with its raw materil costs by having better margins in its products.It has a capacity of 175,000 tonnes of explosives, 140 million detonators and 20 million metres of detonating fuse.The explosives industry caters to the mining and infrastructure sector both of which are booming bigtime.The industry itself is a 1600crs industry and its growing at a very fast pace.Coal industry accounts majority for it revenues and with soaring prices of coal and strong demand from metals, power and cement industries, which are among the major users of coal, will lead to more coal mining operations and therefore would boost the demand for explosives.SEL is a key supplier to Coal India and has recently acquired two coal mining and selling rights.The company is setting base in Nigeria with a total capacity of about 10,000 mt and is also eyeing another location in Africa.Further, the company is venturing into specialty chemicals used in improving the working conditions in open cast mines.With all these developments,Solar explosive is set to do wonders in the bourses.The company is expected to post a 68% jump in sales and 80% jump in profits this fiscal.Its not a valuation play so therefore glancing through the numbers wont be of any good.Booming demand,high product prices,strong pedigree,expansions would catapult the company into a different league.A great buy altogether
Solar Explosives/industries Ltd
Story:Solar explosive is one of the largest explosives and explosive-initiating devices manufacturer in the world.It posses one of the most modern integrated explosive manufacturing facility.It buys ammonium but manufactures other raw materials in-house.The backward integration helps it to cope with its raw materil costs by having better margins in its products.It has a capacity of 175,000 tonnes of explosives, 140 million detonators and 20 million metres of detonating fuse.The explosives industry caters to the mining and infrastructure sector both of which are booming bigtime.The industry itself is a 1600crs industry and its growing at a very fast pace.Coal industry accounts majority for it revenues and with soaring prices of coal and strong demand from metals, power and cement industries, which are among the major users of coal, will lead to more coal mining operations and therefore would boost the demand for explosives.SEL is a key supplier to Coal India and has recently acquired two coal mining and selling rights.The company is setting base in Nigeria with a total capacity of about 10,000 mt and is also eyeing another location in Africa.Further, the company is venturing into specialty chemicals used in improving the working conditions in open cast mines.With all these developments,Solar explosive is set to do wonders in the bourses.The company is expected to post a 68% jump in sales and 80% jump in profits this fiscal.Its not a valuation play so therefore glancing through the numbers wont be of any good.Booming demand,high product prices,strong pedigree,expansions would catapult the company into a different league.A great buy altogether
Oil Country Tubular Ltd
Oil Country Tubular Ltd
Story:This Hyderabad based company is catering to Oil Drilling and Exploration Industry, manufacturing Drill Pipe, Heavy Drill Pipe, Drill Collars, Production Tubing, Casing, Tool Joints, Couplings, Nipples and Crossovers. Company has been assessed and certified by the American Petroleum Institute Quality Registrar.Last year, company had become debt free and settled/paid all pending interest amounts also due to which its interest cost in 07-08 was 37 crs.Due to boom in user industry, company has been doing extremely well.For 9 months ended 31/12/08,company achieved net sales of 267 crs. and PBT of 74 crs.During this period, interest cost was just 1.88 crs.Despite paying 21 crs. as income tax,PAT for 9 months is 53 crs.On Equity of 44 crs.,EPS is Rs. 12/-.Scrip is being accumulated by knowledgeable circles in expectation of bright future for the company. As per our sources, for 08-09, its sales should be around 410/- crs. and EPS for full year will be Rs. 18/-. Stock is trading at less than 3 x FY09E earnings. Some analysts are forecasting EPS of 21-22 for 09-10.Company will declare 25% maiden dividend.Considering the above mentioned stuff,Oil Country Tubular Ltd looks to be a great buy for long term horizion
Oil Country Tubular Ltd
Story:This Hyderabad based company is catering to Oil Drilling and Exploration Industry, manufacturing Drill Pipe, Heavy Drill Pipe, Drill Collars, Production Tubing, Casing, Tool Joints, Couplings, Nipples and Crossovers. Company has been assessed and certified by the American Petroleum Institute Quality Registrar.Last year, company had become debt free and settled/paid all pending interest amounts also due to which its interest cost in 07-08 was 37 crs.Due to boom in user industry, company has been doing extremely well.For 9 months ended 31/12/08,company achieved net sales of 267 crs. and PBT of 74 crs.During this period, interest cost was just 1.88 crs.Despite paying 21 crs. as income tax,PAT for 9 months is 53 crs.On Equity of 44 crs.,EPS is Rs. 12/-.Scrip is being accumulated by knowledgeable circles in expectation of bright future for the company. As per our sources, for 08-09, its sales should be around 410/- crs. and EPS for full year will be Rs. 18/-. Stock is trading at less than 3 x FY09E earnings. Some analysts are forecasting EPS of 21-22 for 09-10.Company will declare 25% maiden dividend.Considering the above mentioned stuff,Oil Country Tubular Ltd looks to be a great buy for long term horizion
Vivimed Labs ltd
Vivimed Labs ltd
Story:Vivimed Labs Ltd was incorporated as a Private Limited company in 1989 and subsequently converted into a Public Limited Company.The company over the years has strategized, planned and moved into the activity of synthesis of "specialty chemicals" for end-use in Personal Care Industry. The company today has several products in this segment and has moved these products into over 20 countries across the globe.The company's manufacturing facilities have the required approvals from both domestic and international regulatory authorities. The company caters to marquee clients world wide. Today, it has a second lead position in the world in an anti-microbial product branded as "Viv20".Vivimed makes specialty chemicals such as Triclosan, an anti-bacterial that finds wide application in dental care and deodorants; Avis, which offers sunscreen protection; CaGP, an ingredient that finds application in dental care; Chlorophenesin, an anti-fungal that serves as a preservative in cosmetics and foodstuffs; and NDGA, an anti-oxidant.Vivimed labs has a coveted client base.Apart from Hindustan Lever, Vivimed also has customers such as Marico and Anchor Healthcare in the domestic market; Unilever, Arnaud of France and Harmet International of the US are some of its customers on the export market.Vivimed has been quite a consistent performer in the last few years.According to the management,"Earnings should continue because there are new products which are coming up, which have got better margins compared to the old quarter and the new products will have better margins.Vivimed labs currently is trading at an attractive valuations and scrip is expected to perform well over the coming 3-4 years.One can buy the scrip at dips for a 2year period horizion.
Vivimed Labs ltd
Story:Vivimed Labs Ltd was incorporated as a Private Limited company in 1989 and subsequently converted into a Public Limited Company.The company over the years has strategized, planned and moved into the activity of synthesis of "specialty chemicals" for end-use in Personal Care Industry. The company today has several products in this segment and has moved these products into over 20 countries across the globe.The company's manufacturing facilities have the required approvals from both domestic and international regulatory authorities. The company caters to marquee clients world wide. Today, it has a second lead position in the world in an anti-microbial product branded as "Viv20".Vivimed makes specialty chemicals such as Triclosan, an anti-bacterial that finds wide application in dental care and deodorants; Avis, which offers sunscreen protection; CaGP, an ingredient that finds application in dental care; Chlorophenesin, an anti-fungal that serves as a preservative in cosmetics and foodstuffs; and NDGA, an anti-oxidant.Vivimed labs has a coveted client base.Apart from Hindustan Lever, Vivimed also has customers such as Marico and Anchor Healthcare in the domestic market; Unilever, Arnaud of France and Harmet International of the US are some of its customers on the export market.Vivimed has been quite a consistent performer in the last few years.According to the management,"Earnings should continue because there are new products which are coming up, which have got better margins compared to the old quarter and the new products will have better margins.Vivimed labs currently is trading at an attractive valuations and scrip is expected to perform well over the coming 3-4 years.One can buy the scrip at dips for a 2year period horizion.
Idea Cellular Ltd
Idea Cellular Ltd
STORY:As of March' 09,IDEA Cellular, the fifth largest mobile operator in the country, made large investments in FY09, including the acquisition of Spice Communications, to expand its operations.They are likely to pay off this year with the company improving its margins and keeping the rapid growth in revenues intact. Future growth prospects in the booming Indian telecom industry and cheaper valuations compared to its peers make Idea a good stock to consider at the current level with a horizon of two years.
Business:Idea Cellular, a part of the Aditya Birla group, provides telecom services based on GSM (global system for mobile communications) technology . Idea, which has licences and radio frequencies to operate in all the 22 service areas or telecom circles in the country, is active in 15 circles. It has about 15% share in the GSM user base, with 43 million subscribers, just behind BSNL, the third largest GSM operator with 16% market share.In June 08, Idea acquired Spice Communications, which offered GSM mobile services in Punjab and Karnataka . Idea also started operations in Mumbai and Bihar last fiscal. All these, plus the impressive gains in other circles, helped the company increase its user base by 72% in FY09. Idea has seen a gradual decline in its average revenue per user (ARPU) per month over the last few quarters. However, the fall is substantially lower compared to its peers. In the December 08 quarter, its ARPU fell by 4.7% to Rs 266 from the year-ago levels. During the same period, Bharti Airtels ARPU dropped by 9% to Rs 324, while Reliance Communications (RCom) saw a steep decline of 20% at Rs 271.Idea has also seen an improvement in the usage pattern of its subscribers. It reported an 8.8% jump in minutes of usage per user per month (MoUs) at 410 minutes during the December 08 quarter. For Bharti, MoUs increased by 7% to 505 minutes whereas RCom witnessed a sharp drop of 8.7% in MoUs at Rs 449.Revenue from non-voice segments known as value added services (VAS) has seen a gradual improvement for Idea in line with the industry leader Bharti. Ideas VAS revenue as a percentage of ARPU rose from 8% in the December 07 quarter to 9.5% in the quarter ended December 08. During the said period, Bhartis share of VAS revenue remained steady at 9.5%, while for Rcom, it crawled from 6.4% to 7.4%.
Growth drivers:Idea Cellular plans to expand into Tamil Nadu and Jammu and Kashmir in FY10. Ideas operations are expected to stabilise over the next two-three quarters. The operations in Punjab, Karnataka, Mumbai and Bihar are likely to turn profitable during this period.Post-Spice acquisition, Idea had witnessed a gradual slump in customer base in Punjab and Karnataka. But now, it is on the recovery path. While Idea has already regained its subscriber base in Punjab, it has got the momentum going in Karnataka too.Apart from the basic wireless operations, Idea is focussing on international long distance (ILD) operations , using Spices infrastructure. Idea is already providing ILD services to Sri Lankan operators and is in talks with operators in Europe and the US. Until now, Idea was using services from other operators to terminate ILD calls. Now, it will not have to pay carriage charges to other players.
Financial performance:Ideas revenues have grown at a compounded annual growth rate of 46% in the five years ended March 08. Its operations turned profitable in FY05 and the net profit has increased more than 10 times since then. In the December 08 quarter, its revenues shot up 53.2% year-on-year to Rs 2,620.9 crore.Earnings before depreciation , interest, tax and amortisation (EBDITA) rose 22.5% to Rs 569.4 crore. Net profit, however, grew just about 8% to Rs 256.2 crore, following higher depreciation and increased operating expenses due to entry into new circles.
Valuations:At the current price of over Rs 54, Idea attracts the cheapest valuation among the top three listed mobile operators. Its enterprise value (EV) is close to seven times its EBITDA. Ideas value per subscriber is also much lower than that of the other two. RINGING NUMBERS.Idea Cellular holds 16% stake in the teleocm tower company Indus Towers. Bharti Airtel and Vodafone are other partners in the company.Idea along with Spice Communications, which it acquired last June and Aditya Birla Telecom operates in 15 out of 22 telecom circles in the country.IT caters to 43million subscribers across circles and covers 58% of the population in the country.Over 94% of its mobile revenue comes from prepaid customers, which has grown from 92.6% a year ago.The rate at which it loses its prepaid customers is more than its postpaid churn. However, the prepaid churn has come down to 4.4% from 4.9% a year ago. In the same period, its postpaid churn has dropped from 2.9% to 2.7%.While share of its revenue from value added services has increased from 8% to 9.5% in a year, average realised rate per user has fallen from 74 pais to 64 paise.With a manpower of 6,670, Idea has covered 1,37,585 villages and towns as of December 08.
Idea Cellular Ltd
STORY:As of March' 09,IDEA Cellular, the fifth largest mobile operator in the country, made large investments in FY09, including the acquisition of Spice Communications, to expand its operations.They are likely to pay off this year with the company improving its margins and keeping the rapid growth in revenues intact. Future growth prospects in the booming Indian telecom industry and cheaper valuations compared to its peers make Idea a good stock to consider at the current level with a horizon of two years.
Business:Idea Cellular, a part of the Aditya Birla group, provides telecom services based on GSM (global system for mobile communications) technology . Idea, which has licences and radio frequencies to operate in all the 22 service areas or telecom circles in the country, is active in 15 circles. It has about 15% share in the GSM user base, with 43 million subscribers, just behind BSNL, the third largest GSM operator with 16% market share.In June 08, Idea acquired Spice Communications, which offered GSM mobile services in Punjab and Karnataka . Idea also started operations in Mumbai and Bihar last fiscal. All these, plus the impressive gains in other circles, helped the company increase its user base by 72% in FY09. Idea has seen a gradual decline in its average revenue per user (ARPU) per month over the last few quarters. However, the fall is substantially lower compared to its peers. In the December 08 quarter, its ARPU fell by 4.7% to Rs 266 from the year-ago levels. During the same period, Bharti Airtels ARPU dropped by 9% to Rs 324, while Reliance Communications (RCom) saw a steep decline of 20% at Rs 271.Idea has also seen an improvement in the usage pattern of its subscribers. It reported an 8.8% jump in minutes of usage per user per month (MoUs) at 410 minutes during the December 08 quarter. For Bharti, MoUs increased by 7% to 505 minutes whereas RCom witnessed a sharp drop of 8.7% in MoUs at Rs 449.Revenue from non-voice segments known as value added services (VAS) has seen a gradual improvement for Idea in line with the industry leader Bharti. Ideas VAS revenue as a percentage of ARPU rose from 8% in the December 07 quarter to 9.5% in the quarter ended December 08. During the said period, Bhartis share of VAS revenue remained steady at 9.5%, while for Rcom, it crawled from 6.4% to 7.4%.
Growth drivers:Idea Cellular plans to expand into Tamil Nadu and Jammu and Kashmir in FY10. Ideas operations are expected to stabilise over the next two-three quarters. The operations in Punjab, Karnataka, Mumbai and Bihar are likely to turn profitable during this period.Post-Spice acquisition, Idea had witnessed a gradual slump in customer base in Punjab and Karnataka. But now, it is on the recovery path. While Idea has already regained its subscriber base in Punjab, it has got the momentum going in Karnataka too.Apart from the basic wireless operations, Idea is focussing on international long distance (ILD) operations , using Spices infrastructure. Idea is already providing ILD services to Sri Lankan operators and is in talks with operators in Europe and the US. Until now, Idea was using services from other operators to terminate ILD calls. Now, it will not have to pay carriage charges to other players.
Financial performance:Ideas revenues have grown at a compounded annual growth rate of 46% in the five years ended March 08. Its operations turned profitable in FY05 and the net profit has increased more than 10 times since then. In the December 08 quarter, its revenues shot up 53.2% year-on-year to Rs 2,620.9 crore.Earnings before depreciation , interest, tax and amortisation (EBDITA) rose 22.5% to Rs 569.4 crore. Net profit, however, grew just about 8% to Rs 256.2 crore, following higher depreciation and increased operating expenses due to entry into new circles.
Valuations:At the current price of over Rs 54, Idea attracts the cheapest valuation among the top three listed mobile operators. Its enterprise value (EV) is close to seven times its EBITDA. Ideas value per subscriber is also much lower than that of the other two. RINGING NUMBERS.Idea Cellular holds 16% stake in the teleocm tower company Indus Towers. Bharti Airtel and Vodafone are other partners in the company.Idea along with Spice Communications, which it acquired last June and Aditya Birla Telecom operates in 15 out of 22 telecom circles in the country.IT caters to 43million subscribers across circles and covers 58% of the population in the country.Over 94% of its mobile revenue comes from prepaid customers, which has grown from 92.6% a year ago.The rate at which it loses its prepaid customers is more than its postpaid churn. However, the prepaid churn has come down to 4.4% from 4.9% a year ago. In the same period, its postpaid churn has dropped from 2.9% to 2.7%.While share of its revenue from value added services has increased from 8% to 9.5% in a year, average realised rate per user has fallen from 74 pais to 64 paise.With a manpower of 6,670, Idea has covered 1,37,585 villages and towns as of December 08.
Phillips Carbon Black Ltd
Phillips Carbon Black Ltd
Story
HILLIPS CARBON Black, part of the RP Goenka group, is India''s largest manufacturer of carbon black, a key input for the tyre industry. After a phase of stagnant production and sales growth, the company has now entered a growth phase. Considering the rising demand for tyres in India and a shift in global carbon black capacity to the Asian region from the developed world, the company has expanded its capacity.Another revenue-driver for the company is sale of surplus power from the co-generation plants it plans to set up at all its facilities. The company has also obtained approvals for selling carbon credit and has begun to earn some revenues from it.All these factors make Phillips Carbon an interesting growth story and investors with a 12-15 month horizon can invest in the stock.Founded in 1960, Phillips Carbon is one of the three carbon black manufacturers in India.This capacity is spread across three facilities with the Durgapur unit in West Bengal accounting for little over half of it.The domestic carbon black industry is globally competitive and its quality matches international standards.The company is also investing in a co-generation plant based on waste-heat recovery at all its units. Nearly 80% of the power will be available for sale to the state electricity boards with incremental revenues of over Rs 90 crore. With PBIT margin of 87% at its co-generation business, this will add around Rs 75 crore to the company''s PBIT during FY09.Besides providing it with cash flows, the power business will de-risk the company''s finances from the fluctuation in feedstock prices, which are pegged to international crude oil prices.Though there are no other pure-play carbon black companies listed in India, Phillips Carbon''s P/E multiple is very low compared to similar-sized chemical companies.The stock has the potential to offer good returns to investors.
Phillips Carbon Black Ltd
Story
HILLIPS CARBON Black, part of the RP Goenka group, is India''s largest manufacturer of carbon black, a key input for the tyre industry. After a phase of stagnant production and sales growth, the company has now entered a growth phase. Considering the rising demand for tyres in India and a shift in global carbon black capacity to the Asian region from the developed world, the company has expanded its capacity.Another revenue-driver for the company is sale of surplus power from the co-generation plants it plans to set up at all its facilities. The company has also obtained approvals for selling carbon credit and has begun to earn some revenues from it.All these factors make Phillips Carbon an interesting growth story and investors with a 12-15 month horizon can invest in the stock.Founded in 1960, Phillips Carbon is one of the three carbon black manufacturers in India.This capacity is spread across three facilities with the Durgapur unit in West Bengal accounting for little over half of it.The domestic carbon black industry is globally competitive and its quality matches international standards.The company is also investing in a co-generation plant based on waste-heat recovery at all its units. Nearly 80% of the power will be available for sale to the state electricity boards with incremental revenues of over Rs 90 crore. With PBIT margin of 87% at its co-generation business, this will add around Rs 75 crore to the company''s PBIT during FY09.Besides providing it with cash flows, the power business will de-risk the company''s finances from the fluctuation in feedstock prices, which are pegged to international crude oil prices.Though there are no other pure-play carbon black companies listed in India, Phillips Carbon''s P/E multiple is very low compared to similar-sized chemical companies.The stock has the potential to offer good returns to investors.Tata Elxsi Ltd
Tata Elxsi Ltd
Story:Tata Elxsi provides systems integration and software development services in the information technology field.It includes industries such as automotive, consumer electronics, entertainment,multimedia, medical instrumentation, semiconductors, networking and wireless.During 2007-08, the company reported a decent 30.5 per cent year on year growth in revenue notwithstanding an uncertain demand environment and volatile currency movements.The year saw major capital expenditure ( Rs 42.4 crore) stemming from new development centres at Coimbatore and Hyderabad along with expansion of existing capacity at Bangalore centre.Meanwhile, headcount increased from 2,761 employees last year to 3,568 employees. C.f. 2006-07 sales grew by 30 per cent while employee costs increased 38 per cent, depreciation increased 54 per cent and SG&A increased 41 per cent. Consequently, profit after tax grew 1.4 per cent over the previous year while profit after tax margin declined by 378 basispoints.For the first time in several years, the company has taken debt on its books (Rs 55.3 crore secured loan) to fund its expansion plans and working capital needs.I expect revenues to grow at 20 per cent CAGR over FY08-10E while earnings are expected to grow at 18 per cent CAGR. .A good safe bet for long term returns.
Tata Elxsi Ltd
Story:Tata Elxsi provides systems integration and software development services in the information technology field.It includes industries such as automotive, consumer electronics, entertainment,multimedia, medical instrumentation, semiconductors, networking and wireless.During 2007-08, the company reported a decent 30.5 per cent year on year growth in revenue notwithstanding an uncertain demand environment and volatile currency movements.The year saw major capital expenditure ( Rs 42.4 crore) stemming from new development centres at Coimbatore and Hyderabad along with expansion of existing capacity at Bangalore centre.Meanwhile, headcount increased from 2,761 employees last year to 3,568 employees. C.f. 2006-07 sales grew by 30 per cent while employee costs increased 38 per cent, depreciation increased 54 per cent and SG&A increased 41 per cent. Consequently, profit after tax grew 1.4 per cent over the previous year while profit after tax margin declined by 378 basispoints.For the first time in several years, the company has taken debt on its books (Rs 55.3 crore secured loan) to fund its expansion plans and working capital needs.I expect revenues to grow at 20 per cent CAGR over FY08-10E while earnings are expected to grow at 18 per cent CAGR. .A good safe bet for long term returns.
Dolphin Offshore Enterprises India Ltd
Dolphin Offshore Enterprises India Ltd
Introductionolphin Offshore(DOL) provides marine engineering services to the offshore oil & gas industry. It had a tough FY08 due to unpaid dues by its key customer, weak dollar and adverse weather. But it has scaled up its business, with new vessels set to join its fleet. This offers good growth opportunities in future. Long-term investors can consider the stock.
BUSINESSOL executes offshore engineering turnkey contracts for petroleum companies, involving installation, inspection, maintenance, repairs etc.From being a provider of diving services, it has become an independent EPC contractor.It owns 14 vessels and has ordered two workboats and one construction barge, to be delivered in H2 FY09.It has seen a rise in average ticket size of contracts. It has a long list of successful contracts, mainly with ONGC. It has also tied up with foreign companies for technical support. It plans to diversify into ship building and repair, and obtained the Gujarat governments nod for a shipyard at Jafrabad. Total investment outlay for its ship venture is Rs 400 crore.
GROWTH DRIVERSue to a boom in offshore exploration, demand for DOLs services is strong. ONGC is investing $3 billion to overhaul its ageing infrastructure. Considering DOLs proven track record, eligibility to bid and arrival of new marine assets, its likely to emerge as a major beneficiary. It will also be able to bid for contracts in the Middle East. The rupees recent depreciation is favourable for DOL. It expects to recover Rs 38 crore outstanding from L&T on account of an ONGC contract.
FINANCIALS:The company has posted a CAGR of 78% over the past five years, while its revenues grew 49%. DOLs RoC has declined, as the $15 million it raised via FCCBs is tied up in the new vessels it ordered. Despite a boom in offshore exploration, DOL suffered in FY08. Outstanding dues from a couple of ONGCs contracts increased its debt burden, while adverse weather cut the offshore working season to 5.5 months, against the normal 7-8 months , leading to delays. Profit growth mainly came from extraordinary profits from sale of two vessels.
VALUATIONS:I expect Dolphin Offshore Enterprises India Ltd to put up a better performance this year. It is likely to post a turnover of Rs 400 crore in FY10, with operating profit margins of over 18%. Net profit is set to grow to around 30 crs .The CMP of Rs 160 discounts the projected FY10 earnings 6.4 times, considering fully diluted equity of Rs 11.96 crore. This is less than half its five-year average P/E of 16.2 and lower than its peers.Considering altogether
Dolphin Offshore Enterprises India Ltd
Introduction
olphin Offshore(DOL) provides marine engineering services to the offshore oil & gas industry. It had a tough FY08 due to unpaid dues by its key customer, weak dollar and adverse weather. But it has scaled up its business, with new vessels set to join its fleet. This offers good growth opportunities in future. Long-term investors can consider the stock. BUSINESS
OL executes offshore engineering turnkey contracts for petroleum companies, involving installation, inspection, maintenance, repairs etc.From being a provider of diving services, it has become an independent EPC contractor.It owns 14 vessels and has ordered two workboats and one construction barge, to be delivered in H2 FY09.It has seen a rise in average ticket size of contracts. It has a long list of successful contracts, mainly with ONGC. It has also tied up with foreign companies for technical support. It plans to diversify into ship building and repair, and obtained the Gujarat governments nod for a shipyard at Jafrabad. Total investment outlay for its ship venture is Rs 400 crore. GROWTH DRIVERS
ue to a boom in offshore exploration, demand for DOLs services is strong. ONGC is investing $3 billion to overhaul its ageing infrastructure. Considering DOLs proven track record, eligibility to bid and arrival of new marine assets, its likely to emerge as a major beneficiary. It will also be able to bid for contracts in the Middle East. The rupees recent depreciation is favourable for DOL. It expects to recover Rs 38 crore outstanding from L&T on account of an ONGC contract. FINANCIALS:The company has posted a CAGR of 78% over the past five years, while its revenues grew 49%. DOLs RoC has declined, as the $15 million it raised via FCCBs is tied up in the new vessels it ordered. Despite a boom in offshore exploration, DOL suffered in FY08. Outstanding dues from a couple of ONGCs contracts increased its debt burden, while adverse weather cut the offshore working season to 5.5 months, against the normal 7-8 months , leading to delays. Profit growth mainly came from extraordinary profits from sale of two vessels.
VALUATIONS:I expect Dolphin Offshore Enterprises India Ltd to put up a better performance this year. It is likely to post a turnover of Rs 400 crore in FY10, with operating profit margins of over 18%. Net profit is set to grow to around 30 crs .The CMP of Rs 160 discounts the projected FY10 earnings 6.4 times, considering fully diluted equity of Rs 11.96 crore. This is less than half its five-year average P/E of 16.2 and lower than its peers.Considering altogether
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