Jindal Drilling Industries
Reco price: Rs 754
Target price: Rs 1,056
Market price: Rs 755
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Jindal Drilling Industries offers good prospects as new rigs are being
acquired and its pricing environment changes for better. The company
offers varied services to oil exploration and production majors
including offshore drilling, directional drilling and mud logging and
derives 85 per cent of revenues from offshore drilling.
The company has plans to acquire new-build jack-up rigs through its
Singapore-based subsidiaries for $35 million. These new rigs will
start operation from the fourth quarter of FY09, and the company has
already entered into a contract with ONGC for one rig at $148,000 a
day for five years.
Due to strong crude prices which fuel higher price realisations in
rigs and adding to the number of rigs, Research expects Jindal
Drilling's net sales increase at a 56 per cent CAGR over the next two
years. At Rs 754, the stock is valued at 46.3 and 29.7 times estimated
FY08 and FY09 earnings, respectively.
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