Anyone attend AGM . Pls share notes
I did attendâŚwill update in next couple of daysâŚas I am travelling.
ONGC is in the process of appointing a consultant who will assist in developing (UD-1) the discovery, the official said.
Keenly awaiting the notes from AGM attendees
I along with few other friends attended the AGM on 29th September in Hyderabad. I did take down some notes which I am sharing. Please be aware that I might have misunderstood some of the statement by management.
2017 AGM Updates:
Cabinet approval of 3000Cr for seismic survey: Itâs not new. Itâs the same for which alphageo is executing the large order from ONGC.
Future Growth:
⢠Didnât bid for any project in last one year.
⢠Have started bidding for new tenders which are coming out now.
⢠Large size orders are not likely to come. Typical size is 60-120Cr.
⢠Seismic orders alone not sufficient for sustained growth. Hence trying to get into other niche area like aerial geophysical survey.
⢠Expect international orders in coming years
Fund raising plan:
⢠300Cr fund raising is an enabling resolution only. It was last year as well.
⢠They will need money only when new orders come in. Also, they might not need the whole amount.
⢠The company doesnât need any more capex for the current orders.
⢠Expect capex only with new orders
Aerial Survey:
⢠Primarily used for mining and hydrocarbons
⢠Only 15% of the area is mapped. Rest of the area need to be mapped. Hence opportunity size is huge.
⢠Phase I tenders are of 135-140cr. There are 4 tenders in Phase I. For first of them bidding process already completed. The company is L1 in first.
⢠It needs different kind of equipment
⢠Company will lease the equipment till there is certainty of continuous order flow
GST Impact:
⢠The company has no GST implications as itâs a pass through for them.
General
⢠Globally oil prices are subdued and hence the seismic activities as well.
⢠In India the oil exploration activities pick up when the oil prices are lower.
⢠Working capital cycle is 2-2.5 months.
⢠Payments with ONGC/OIL are regular.
Disc: Invested and no trading since more than 6 months
14 Likes
Thanks Raj for the AGM update.
One thing that surprises me is :
I thought the vice-versa would hold true.
the reason management gave was when crude prices are low, the service costs would be lower and govt would be in a better position to get the services done at a lower price and hence they push more when crude prices are lower.
However the international business is opposite, survey activity is low with lower crude prices
1 Like
⢠Large size orders are not likely to come. Typical size is 60-120Cr.
⢠Seismic orders alone not sufficient for sustained growth. Hence trying to get into other niche area like aerial geophysical survey.
- Would you consider this as a negative or positive in the future. ?
- What was the typical order size that alphageo used to get eofre the large 3000 cr ONGC order which is being currently executed?
- How many such orders can they get 2 years down the lane?
- They sound a bit pessimistic (atleast by reading) when they say that seismic orders are alone not sufficient. How much expertise do they have in aerial survey business? Who are the other players in aerial survey?
Request your expert opinions on the same.
1 Like
This is the reason mkt is not giving high pe. Commanding 8 trailing pe and 4 pe (1 year forward). Ongc is once in a lifetime opportunity for alphageo like companies. It wonât be able to post 75-80 Cr pat after ongc order is executed. So, pe would adjust again due to lower earnings.
Aerial survey projects will come but i m not dure how big the opportunity size here is. Also, as they will lease the equipments, margins wonât be as high i believe.
This is a neat company with reasonably good mgmt, but visibility would always be an issue due to the nature of the business.
I m invested. No transaction in last 3 months.
2 Likes
However good management may be, ultimately market only values earnings growth and visibility
@Mridul
Markets are not always perfect. I think there is a too much negativity around alphageo and too much positive vibes about one of itâs competitor(donât want to name them).
I along with couple of friends met Dinesh Alla in his office and discussed all possibilities. They have started bidding now and there are many small/medium size tenders coming out. Next couple of quarters we will see new order wins.
However, the kind of topline they will achieve in FY18/FY19 may not come going forward.
Regards,
Raj
4 Likes
In general itâs true but there are always anomaly in markets and I feel this is such a case. Letâs see what happens in next 2-3 quarters.
Disc: Invested and Holding
1 Like
Agree. Usually a good management overcomes all such temp surmountable issues. But they have to go international. In India- depending on govt. orders to survive, will be always discounted by market
I may be wrong in generalizing it but in most sectors where Govt. involvement is high or where companies are dependent upon Govt. contracts for business, the PE assigned by market generally turns out to be on the lower side. Governments work towards several conflicting ends between economic development and economic growth. In the process, they often end up screwing up some of the best sectors/companies. Besides bureaucracy takes its own tortoise pace to execute. I am not sure how much this would play a role for Alpha. but it could be another factor market may be discounting.
The next curve for the company seems to be its best possible shot for future growth. However, its a mighty risky proposition to wait to see the ideas taking shape and coming to reality. Not an easy road ahead.
Disc: Reduced position in last six month. Now tracking position only.
1 Like
-
âWe are looking at mega investment in India, as it is an important market. India is going from 4.6 million barrels per day of oil consumption to 10 million barrels per day by 2040,â said Amin Nasser, chief executive officer (CEO), Saudi Aramco.
-
He added the company was attracted to Indiaâs growth potential. Indiaâs oil consumption has increased by 11 per cent in 2016, compared to a global average growth of 1.5 per cent.
-
The ongoing Open Acreage Licensing policy round is set to attract further investment in the sector. India has 26 sedimentary basins over 3.14 million sq km. Hydrocarbons are being produced in seven of these. In the new rounds, 2.7 million sq km will be on offer â 1.5 million onshore and 1.2 million offshore area. Bids are being invited on a revenue-share model, providing pricing and marketing freedom to operators.
2 Likes
Few thoughts, reading the Annual reports of Alphageo. Would be helpful if someone could comment on these observations:
-
Promoters Dinesh Alla and Savita Alla(new to the board) took a gross remuneration of 8 Crore in FY17. This is very very high, considering their previous year remuneration was 1 Crore, and that Alphageo reported PAT 50.55 Crore and CFO 18.8 Crore in FY17
-
The company was schedule compliance of projects (85%+ in FY 11-12,12-13). I find that the company has stopped reporting this measure (in FY1617)
-
Similarly the company was reporting channel count (measure of growth), revenue per employee. It has stopped tracking these measures.
-
THe company stopped reporting number of safe work hours and number of accidents (900,000 safe hours in FY14). The company is ignoring major metrics and try to keep focused on growth potential, the 1300 Crore ONGC order and how the company will overcome challenges in scaling up.
-
Capital work in progress is the same Rs 1,04,23,714 at the end of FY 16 and FY17. I see something fishy here - some asset lying idle without capitalization for over a year.
13 Likes
I would suggest you send these queries to their CS. She should be able to clarify.
Regards,
Raj
Dics: Invested . No trading in last 3 months.
Rise in oil price is positive sentiment for the company.
Amazing deep-dive analysis. Looks like an x-ray report on financial metrics. Thank you very much.
Investor Sanjay Dutt bought 35000 shares in block deal today.
1 Like