Buy Shiv Vani Oil; Target : Rs 253 ::ICICI Securities (PDF link)

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D i s a p p o i n t  i n g   q u a r t e r ;   o rd e r s   t o   p r o v i d e   t r i g g e r
Shiv-Vani Oil declared its Q3FY12 results with revenues at | 340 crore,
EBITDA at | 114.6 crore and PAT at | 17 crore. The results were below
our estimates on account of forex losses of | 392.3 crore on debt raised
through the FCCB route. Revenues declined 6.8% YoY to | 340 crore but
grew 5.6% QoQ. However, this sequential QoQ growth in revenues was
mainly due to the topline being impacted due to seasonality in Q2FY12.
The net profit declined sharply by 49% YoY to | 17 crore. Lack of order
intake over the past few quarters has reduced the order book to | 2,300
crore executable over the next two years. Thus, the management has
reduced its guidance for revenues in FY13. We have revised our FY12E
and FY13E EPS estimates to | 25.8 and | 36.1, respectively. High debt
levels and lack of order intake has put pressure on the stock price over
the past few quarters. However, repayment of debt and flow of new order
in FY13, going forward, would provide upside to the stock. We maintain
our BUY rating on Shiv-Vani Oil with a price target of | 253.

Buy Shiv Vani Oil; Target :Rs 265 :: ICICI Securities

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M a r g i n s   c o n t r a c t … o r d e r s   t o   p r o v i d e   t r i g g e r …
Shiv-Vani Oil’s Q2FY12 revenues were above our estimates but profits
were below our estimates. Revenues increased 12.1% YoY to | 322.1
crore but declined 21.2% on a QoQ basis. This sequential QoQ decline
was mainly due to the seasonal effect, where, on account of monsoon,
seismic activities and utilisations are lower. Net profits increased 2% YoY
to | 33.3 crore. However, lack of order intake over the past few quarters
has reduced the order book to | 2,300 crore executable over the next two
years. We have revised our FY12E and FY13E EPS estimates to | 42 and |
44.1, respectively. High debt levels,  lack of order intake and promoter
pledging of shares has put pressure on the stock price over the past few
quarters. However, repayment of debt and flow of new order in H2FY12,
going forward, would provide upsides to the stock. We maintain our BUY
rating on the stock with a price target of | 265.
ƒ Highlights of the quarter  
The typical seasonal effect in the second quarter of the fiscal year
led to a 21.2% QoQ decline in revenues from | 408.6 crore in
Q1FY12 to | 322.1 crore in Q2FY12. EBITDA margins declined 450
bps YoY to 41% in Q2FY12. The company expects the EBITDA
margin to stabilise at 47%, going forward (our estimates: 45.8% in
FY13E). Shiv-Vani reported a 2% YoY increase in net profit from |
32.6 crore in Q2FY11 to | 33.3 crore in Q2FY12. The net profit was
below our estimates due to the interest cost of | 83.8 crore, an
increase of 5.5% YoY and 20.9% QoQ.
V a l u a t i o n
Shiv Vani’s order book has declined to | 2,300 crore (executable over
next two years) due to lack of order intake over the past few quarters.
This has reduced Shiv-Vani’s revenues visibility, going forward. However,
winning new orders from ONGC may provide an upside to the stock. The
stock is currently trading at 4.7x FY13E EPS of | 44.2. We have valued the
stock at 6x FY13E EPS, with a price target | 265.

Buy Shiv-Vani Oil & Ga; Target : Rs 319 ::ICICI Securities

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R e s u l t s   i n   l i n e … a w a i t i n g   o r d e r s
Shiv-Vani Oil declared its Q1FY12 results that were in line with our
estimates. Revenues increased 2.4% to | 408.6 crore while net profits
increased 5.9% YoY to | 68.3 crore. The EBITDA margin increased 220
bps YoY to 46.2% in Q1FY12, also in line with estimates. However, lack of
order intake over the past few quarters led to a decline in the order book
to | 2,650 crore executable over the next two years. Seismic, drilling and
CBM contributes | 225 crore, | 1,900 crore and | 400 crore, respectively
to Shiv-Vani’s order book. We have maintained our FY12E and FY13E EPS
estimates of | 46.6 and | 49.1, respectively. High debt levels, lack of order
intake and promoter pledging of shares (76.6% of promoter holding) has
put pressure on the stock price over the past few quarters. The company
has bid for orders worth | 2,900 crore, which are expected to be
announced in H2FY12. Repayment of debt and release of pledged
promoters’ shares, going forward, would provide upside to the stock. We
maintain our BUY rating on Shiv-Vani Oil with a price target of | 319.
ƒ Highlights of the quarter
Stable execution of order book and complete fleet utilisation in the
current quarter led to a 2.4% YoY increase in revenues from | 399.1
crore in Q1FY11 to | 408.6 crore in Q1FY12. The EBITDA margins
increased 220 bps YoY to 46.2% in Q1FY12. The company expects
EBITDA margins to stabilise at 47%, going forward (our estimates:
46.3% in FY13E). Shiv-Vani reported a 5.9% increase in net profit
YoY from | 62.2 crore in Q1FY11 to | 68.3 crore in Q1FY12.
V a l u a t i o n
Shiv Vani’s order book has declined to | 2,650 crore (executable over the
next two years) due to lack of order intake over the past few quarters.
This has reduced Shiv-Vani’s revenues visibility, going forward. However,
winning new orders from ONGC may lead to a re-rating for the stock.
Shiv-Vani is currently trading at 3.5x FY13E EPS of | 49.1 and at an
EV/EBITDA multiple of 3.7x FY13E. We have valued Shiv-Vani at 5x FY13E
EV/EBITDA, with a price target | 319

Shiv-Vani Oil & Gas:: PLAY ON CHEAP VALUATION ::IFCI research,

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PLAY ON CHEAP VALUATION
We initiate coverage on Shiv-Vani Oil & Gas Ltd (SVOG) with a Buy rating and a target price of Rs328. SVOG’s full asset utilization provides revenue visibility over FY12-FY13. With crude above USD100/bbl, we expect surge in drilling activities and thus high day rates for SVOG’s existing assets. New order from ONGC would act as catalyst to earnings growth. We expect SVOG to trade above replacement value of its assets over next 12 months.
 Full asset utilisation for next two years: SVOG’s entire fleet of 40 rigs is deployed for FY12 and FY13 and hence full asset utilisation provides revenue visibility over the next two years. This is also reflected in the company’s healthy order book of Rs28bn, which is 1.8x its FY11 revenues.
 Day rate inflection point seems near: With oil price above USD100/bbl, E&P focus will re-shift to onshore oil drilling and thus we expect surge in the onshore rig count and day rates over CY11-CY13. As ONGC contract for eight rigs to get completed by FY13, we expect these rigs to get deployed at 10% higher day rate of USD28,000 per day.
 Huge onshore opportunity: The pending work under NELP III-VII offers USD3bn plus onshore opportunity from ONGC and OIL. We expect SVOG’s share in the opportunity to be in excess of USD221mn each year during FY12-FY15, translating into market share of 30%.
 New orders from ONGC – key catalyst: SVOG’s current order bid book stands at Rs30bn. With tender activity to accelerate at ONGC post its FPO and its commitment for capital expenditure of Rs330bn in FY12 and FY13, we expect new orders of Rs12bn by 4QFY11 at historical bid success rate of 40% for SVOG.
 Valuation and recommendation: We have valued SVOG at 4.8x its FY13E EV/EBITDA, thus arriving at target price of Rs328. The stock is trading at around 80% of replacement value and at 50% discount to its five year average one year forward valuations

BNP Paribas:: BUY Shiv-Vani Oil: Awaiting order-book boost

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Awaiting order-book boost
􀂃 Delay in orders increases concerns about future growth
􀂃 Recent fund raising eases balance-sheet concerns
􀂃 Sell-off unwarranted; new order bookings key to re-rating, in our view
􀂃 Reiterate BUY with a reduced TP of INR402, P/E of 7x FY12E

SHIV-VANI OIL AND GAS EXPLORATION Lower tax rate boosts PAT: Edelweiss

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SHIV-VANI OIL AND GAS EXPLORATION
Lower tax rate boosts PAT


􀂄 Revenue jumped 6.9% Y-o-Y; consolidated order book at INR 30 bn
Shiv-Vani Oil and Gas Exploration Services’ (SVOG) Q3FY11 consolidated revenue, at
INR 3.8 bn, jumped 6.9% Y-o-Y and 30.4% Q-o-Q, as the quarter saw optimum
utilisation of the company’s assets with all rigs under operation. Its consolidated order
book as on December 31, 2010, stands at INR 30 bn (INR 18 bn from drilling, INR 1
bn from seismic, INR 4 bn from CBM, and balance INR 7 bn from the Oman order).

Shiv-Vani (Weak order flow to hit growth rates, BUY): IIFL

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Shiv-Vani (Weak order flow to hit growth rates, BUY): 
Shiv-Vani Oil & Gas, a leading domestic player in onshore oil & gas exploration, has made aggressive investment to capitalise on the ~US$4bn pa onshore opportunity in India, but new order wins have been rather lean in the current fiscal. While current capacity utilisation levels is close to 100%, we have pared down our revenue growth estimates for FY11-12 to 10-12%. This translates to an 18-26% downgrade in our FY11-12ii earnings estimates. Lower capex assumptions mean leverage should reduce. Also, the current valuation of 7.1x FY11ii EPS remains attractive. We cut our target price to Rs480 (from Rs600) but retain BUY.

SHIV-VANI OIL-Lower seismic revenues dent numbers- Edelweiss

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􀂄 Revenue dips 27% Q-o-Q; consolidated order book at INR 30 bn
Shiv-Vani Oil and Gas Exploration Services’ (SVOG) Q2FY11 consolidated revenues, at
INR 2.88 bn, dipped 9.9% Y-o-Y and 27% Q-o-Q, due to lower revenues from the
seismic segment (INR 560 mn compared to INR 1.6 bn in Q1FY11). Seismic survey
crews, which contribute ~25% to the company’s top line, were mostly deployed in the
north eastern region during the quarter and heavy monsoons in the region dented
revenue. Q2FY11 saw optimum utilization of the company’s assets with all rigs under
operation including five deployed in the US and Middle East which are working on spot
basis.

Shiv-Vani Oil and Gas:below estimates on lower order execution: ICICI Sec

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Shiv-Vani Oil and Gas



Below estimates on lower order execution…
Shiv-Vani Oil reported a disappointing set of numbers for Q2FY11 with
revenues declining 11.2% YoY to | 287.3 crore and profits declining
42.2% YoY to |32.6 crore mainly on account of lower order book
execution. The EBITDA declined by 5.4% YoY from |138.2 crore in
Q2FY10 to |130.7 crore in Q2FY11. However, EBITDA margins increased
280 bps YoY to 45.5% in Q2FY11. Shiv-Vani Oil’s profitability was below
estimates mainly on account of higher than anticipated interest costs.
The company’s seismic revenues declined to ~|65 crore in Q2FY11
against ~|165 crore revenues in Q1FY11 on account of lower seismic
activities in North East India due to heavy rains. The company has
reduced its revenue growth targets for FY11E and FY12E due to the
higher execution time period. The company’s order book of ~|3,200
crore would be executed in the 2.5 to three years. The company has bid
for orders worth |3,000 crore and expects to bag |1,000-1,500 crore
worth of orders. We maintain our BUY rating on the stock with a
reduced price target of |474.

SHIV‐VANI Oil & Gas: Edelweiss Diwali Muharat Fundamental Pick

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SHIV‐VANI Oil & Gas Exp Ltd (SHIOIL)
Fundamental – BUY





• SHIV‐VANI OIL & GAS has evolved from an shot‐hole drilling services provider into an integrated
onshore oilfield service provider and now dominates the Indian upstream onshore services space
(especially sub‐segments like onshore seismic and drilling). Among domestic service providers,
SHIOIL owns the largest fleet of both onshore seismic (10 crews) and drilling (40 rigs) assets.

BNP paribas: Top Buys in India

We highlight 8 stocks that we believe have tactical upside possibilities.
1 Shiv Vani Oil: Monopoly player in onshore drilling, one of the cheapest stocks in
the Indian universe.
2 Sesa Goa: Beneficiary of strong volume growth (34% CAGR over next 3 years)
3 Reliance Infrastructure: Trading at close to its worst case price target of
INR1088, as Vishal Sharma pointed out recently in the note titled “Good entry
point”, Dated: 23rd September 2010).
4 Mahindra Satyam: Historical numbers are known. We believe the worst is behind
us.
5 Rolta India: Feedback from the company during our New York Corporate day
clearly indicated the company’s bullishness about new orders.
6 IVRCL Infrastructure: Strong order wins in July-September quarter makes us
positive. Strong presence in roads and irrigation and water resources - still remains
valid.
7 IRB Infra: Only pure play road BOT. Only problem in the sector is the recent lack
of progress in order award, but we believe that's temporary.
8 Nagarjuna Construction: Strong order backlog, execution related problems
relatively lower compared to other construction companies.