Monday, August 29, 2022

Oil and Gas is not dead yet

Elon Musk says the world still needs oil. “Realistically I think we need to use oil and gas in the short term, because otherwise civilization will crumble," Musk said on the sidelines of an energy conference in the southern city of Stavanger.

In my view India will need another 10-20 years after the world transition to clean energy as the technology has to be affordable for India to adopt it fully. Many ideas can be executed on that theme as the stocks are severely battered in Oil & Gas sector. Unfortunately there is not much direct play on this space in private sector. I am averse to PSU companies so ONGC, OIL, GAIL, Coal India etc are out of investing universe for me.

But there is a drilling company named Jindal drilling which can be looked at. A small oil exploration company Selan Exploration which underwent management change recently can be looked at as well. 

Adding > 10% of model portfolio to Selan exploration and ~ 3% to Jindal Drilling.

Model Portfolio:

Sunday, April 17, 2022

TV Today Network Analysis april 2022

 # The company is expected to report better revenue and earnings compared to March 2021 quarter primarily due to up elections and economy opening up. 

# I am expecting the company to do a revenue of at least 250 crores and 75 crores of operating profit.

# Based on this assumption TVTN is expected to close the year with the following financial performance:

        Revenue: 938 crores (ATH)

        OP: 272 crores (ATH)

        PBT: 270 crores (ATH)

        Tax @ 26% = 70 crores (ATH)

        NP: 200 crores (ATH)

        EPS @ 6 crores equity shares = 33.3, (ATH)

        ROE: 20%

        EPS growth: 50%, 5 yr CAGR of 15%

        10 year CAGR profit growth = 35%, 

        Market price in april 2012 ~ 60. 

# Valuation: @ cmp of ~ 410, the stock is valued at 12.3 times current year earnings and a pre tax yield of roughly 11%

# if the earnings are valued at modest 15 times and cash equiv per share of 100 added, the target that can be aimed at is 500 + 100 = 600 /-

# So a conservative target of 600 can be aimed for in next 3 months if there is no major geopolitical shock.

# Ideally a company which does 50% growth in earnings in a year can also get valued @ 30 times earnings in buoyant market conditions. If such ideal scenario plays out the stock can even reach levels of ~1000 in next 1 year time frame.

# Also ideally the stock price performs inline with profit growth over long term. Hence a 35% cagr in stock price from 60 levels ( april 2012) gives a target price of 1200.

Downside: Considering the kind of performance the company is doing, it is highly unlikely that the stock will fall below 10 times earnings. Hence there seems a max  possible downside of for 80/- kind of risk, there is a potential to make 2.5 times risk in modest case and even 8 times in case of blue sky scenario.

On chart also the stock recently bottomed out @ 357 and the structure appears bullish:

All time high of the stock = 557.95 (16th mar 2018)

15 Stock Investment Tips from Rakesh Jhunjhunwala

1. Always go against tide. Buy when others are selling and sell when others are buying.  2. If you believe in the growth prospects o...