Financial Daily from THE HINDU group of publications
Tuesday, Dec 30, 2003
Financial Daily from THE HINDU group of publications Tuesday, Dec 30, 2003 |
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Markets
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Stock Markets Talk of expansion fuels interest in Alpha Geo Deeptha Rajkumar
RIDING the current bullishness in the oil and exploration industry is the stock of Alpha Geo (India) Ltd, which has been gaining ground steadily on the bourses. A strong order book and rumours of expansion have been fuelling interest in this counter. The stock, which had hit a new high of Rs 63.30 (BSE) on December 22, has appreciated significantly from a low of Rs 5 as on March 26, 2003. Today the stock ended the day at Rs 54.35 with around 37,210 shares traded on the BSE. Alpha Geo is one of the few private listed companies that offer seismic services. The company is engaged in data acquisition, processing and interpretation for oil and gas exploration companies. According to brokers, NELP has led to the entry of a number of private players in the oil and gas exploration industry. "This has created increased demand for seismic services. Hence, the growth expectation for the company is quite high,'' a broker said. Analysts are also reasonably bullish on the company given that it has been a market leader in this segment for over a decade or so. "It is a small company with an EPS of Rs 2 on an equity of 5 crore. However, we expect a 50 per cent jump in revenue every year for the next couple of years and a 100 per cent growth in profit over the next few years. Thus, we could be looking at an EPS of Rs 4 for 2004-05 and an EPS of Rs 8 for 2005-06,'' an analyst with a leading domestic broking house said. Yet there are concerns over the fact that the company faces increased competition not only from MNCs with deep pockets but Russian and Polish companies that are price-competitive in this space. When contacted Mr A. Dinesh, Managing Director, Alpha Geo, told Business Line that the company's USP lies in its experience in the industry and the fact that it operates from within the country and as such understands logistics better. The company, whose clients include Oil India, Hindustan Oil Exploration, and the Directorate-General of Hydrocarbons (DGH), is in the process of setting up a `third crew' for a private exploration company. "We are looking to set up a fourth crew by the middle of next year.'' The company has an order book of Rs 15-20 crore which is expected to translate to completion by 2005-06. On expansion, he said that currently the company was restricted to geophysical operations only. "We may look at expanding our data procession centre facilities in Hyderabad or set up another smaller centre in another part of the country. While we currently pursue two-dimensional seismic projects, going forward we are looking to aggressively pursue three-dimensional projects,'' he added. While not denying that the outlook was good, analysts advised caution given the cyclical nature of the industry. "While the sector is doing well, there is a gap between the event and the revenue translating to the bottomline. Besides there is also the possibility of the stock price becoming a victim to high expectations," Mr Sandeep Shenoy, strategist with Pioneer Intermediaries, said.
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