The Hindu Business Line : Bullish undertone in Jindal Drilling

The stock of offshore drilling company Jindal Drilling and Industries Ltd has appreciated by more than 33 per cent over the past month on BSE. While the stock has shown some weakness over the past one week, it has been attributed to the broad market trend.

Brokers believe the bullish undertone at this counter is on account of `buy' reports by some domestic broking houses but analysts are of the view that the sector outlook is positive.

According to analysts, the outlook for companies in this sector is strongly linked to growth in exploration and production activities in both domestic as well as international markets, which is evidently being driven by crude oil prices.

"Thrust is being given by the Government of India to explore and develop more fields to produce oil and gas for which exploration blocks have been awarded to various companies such as ONGC, Reliance, GSPC under the new exploration licensing policy (NELP). Thus, the increase in number of oil blocks from 20 to 55 will see a surge in demand," an analyst with a leading domestic brokerage said.

JDIL, a part of the $450-million D.P.Jindal Group is in the offshore drilling business, providing services to hydrocarbon and oil and gas sectors. ONGC is its principal customer.

The company proposes to exploit the core competency in the drilling business through streamlining of operations. It is also foraying into onshore drilling and deepwater exploration.

Analysts tracking the company are of the view that the company's decision to acquire more rigs would strengthen the topline and the effect would filter down to the margins. "It is more of a fundamental story," said a dealer.

The stock ended the day at Rs 366.80, up 3.62 per cent on the BSE. About 38,500 shares changed hands against two-week average of 62,300 shares.

On the NSE, it closed at Rs 363.15 up 1.21 per cent. Over 67,000 shares were traded on the NSE, of which, about 41 per cent were presented for delivery.

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