Scripscan:Selan Explorations Technology Ltd
Cmp:340
Target:550
Percentage return:70%
Duration:9-12 months
Story:Selan Exploration is engaged in the busines of exploration and production of crude oil. Currently, it carries out its crude oil productions activities in Bakrol, Indrora and Lohar oilfields in Gujarat.Five points to qualify Selan exploration as a great medium to long term buy.
1)The company is presently extracting oil from bakrol which has reserves of over 73 million barrels.Forget the other fields this bakrol itself is worth around 25000crs.Selan exporation mcap is not even 500crs at the present market price.This company is a goldmine folks.
2)Stunning management quality and they are committed to make huge amount of shareholders wealth in the coming years.It buybacks,it allots warrants,it generates huge amount of cash,it has got a wonderful under leveraged balance sheet.Selan is one sure shot winner for the longer run.
3)The stock has delivered an annualized return of 43% from 2000 to till date,much superior to the broader market.Hell,its even higher than what "Buffet sahab"s berkshire delivered in the same period. In my view creating and delivering shareholder value has been well handled by Selan. Selan is now all set to start the process of returning value to shareholders while they continue the value creation process.
4)Selan can very well bore as till fy11 results should stay flat to stagnant.But over the next 2-3 years the company would actually be in a position to ramp up production massively and deliver an EPS of 65-70.Value it as per the sector and the valuation would be in 4 digits.Even if at the present juncture we see the valuation of selan;EV/reserves of 1.1,marketcap to sales of around 5 with a ronw of over 35%,its the cheapest oil exploration company in the bourses.
5)Selan posses robust fundamentals,amazing pedigeree quality,mind boggling prospects,low business risk and which is poised to benefit from a strong macro-economic environment.Selan is a stock which can be kept for lifetime.Make it a part of your core portfolio folks.
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Tuesday, October 5, 2010
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Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
