Friday, October 16, 2009

>SHIV VANI OIL & GAS (ICICI DIRECT)

Good performance…

Shiv Vani Oil has reported strong Q2FY10 results with topline growth of 70.8% YoY to Rs 319.8 crore and bottomline growth of 18.5% YoY to Rs 56.4 crore. The EBITDA increased by 52.2% YoY from Rs 90.8 crore in Q2FY09 to Rs 138.2 crore in Q2FY10. However, net profit growth was lower on account of higher interest and depreciation costs. The company has a robust order book of Rs 3900 crore with execution period of ~2.5 years. We continue to maintain our OUTPERFORMER rating on the back of a robust profit outlook for the next two years.

Highlights for the quarter
Traction in project execution has led to a 70.8% YoY rise in sales from Rs 187.2 crore in Q1FY09 to Rs 319.8 crore in Q2FY10. The company has 30 rigs fully under operations in the current quarter. More rigs are expected to come under operation in the coming quarters. Depreciation charges increased on the back of more rigs coming under operation while interest costs also increased on account of higher debt for funding capital expenditure. Shiv Vani reported a net profit growth of 18.5% YoY from Rs 47.6 crore in Q2FY09 to Rs 56.4 crore in Q2FY10. The company has bid for tenders worth Rs ~3,000 crore and would consider equity dilution for capital expansion if it bags orders for some of the above tenders.

Valuations
Shiv Vani’s current order book of ~Rs 3900 crore to be executed over the next ~2.5 years has improved its visibility, going forward. Traction in execution has also improved the fundamentals of the company. The stock is currently trading at 5.5x FY11E EPS of Rs 61.6 and at an EV/EBITDA multiple of 5.1x FY11E. We have valued Shiv Vani at 6x FY11E EV/EBITDA and rate the stock as OUTPERFORMER with a price target of Rs 456.

To see the full report: SHIV VANI OIL & GAS

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