Hind oil exploration is this a multibagger bet?


(tbhavesh) #41

Super. Which site gives this information?


(avneesh) #42

Good Results.
Sales: 36.62 vs 25.61 cr (Mar-2018) (43% QoQ growth)
36.62 vs 8.2 cr (Jun-2017) (346% YOY growth)
Net Profit: 23.33 vs 16.45 cr (Mar-2018) (42% QoQ growth)
23.33 vs 12.93 cr (Jun-2017) (696% YOY growth)


(Manohar T. Patil) #43

Second Quarter Results Declared -
Sales - 66.47 Crs.
Net Profit - 42.81 Crs.
EPS - 3.28
HOEC-Signed-results.pdf (320.8 KB)

Would appreciate your thoughts on the results


(avneesh) #44

Hi Manohar,

The results are great. The Assam blocks have started contributing in a big way to the profits.

Quarterly profit is at 42.81 crores against the guidance of 36 cr. It’s a positive surprise for the street. Hopefully, the price will react in a positive way as well.

Tomorrow is the conference call, I’m looking for revised future management guidance and status on their different blocks.

FII’s have also been increasing their stake continuously.


(Mohammed Rehan) #45

Why are they not paying tax ?


(Manohar T. Patil) #46

Hi Avneesh, Did you or anyone else attend the conference call? I am not able to find the recording on researchbytes. Would appreciate if anyone has captured insights from conf. call.

Cheers
-Manohar


(avneesh) #47

Hi Manohar,

I am also waiting for the research bytes to upload the conference call. If someone else has attended the call, they can share their notes.

@mohdrehan1 As far as I remember in one of the conference calls they have mentioned about the 10 year tax break for their Assam block. Will have to check it again.


#48

Call transcript attached. A few points I’d like to highlight:

  1. Run rate PAT now at 132Cr. Kharsang adds another 13Cr which they are not counting. So total 155Cr. Stock trading ~ 11x.
  2. CFO is comfortably higher than accounting earnings.
  3. Gas price on Dirok gas going forward will be higher by 10%.
  4. Guiding higher to 200Cr form 140-170 for this year itself. Does not include Kharsang. (Personal opinion - likely under-guiding yet again.)
  5. Kharsang potential is 3-4x higher than what they are getting currently.
  6. B-80 will likely contribute another 100Cr. Will take 18 months to develop.
  7. PY-3 and Cambay fields pure upside (unaccounted for lottery tickets)
  8. Preparing for second round of DSF. No outside funding to be raised for that (Capex requirement is rather low for DSF).
  9. Kharsang/Jubilant stake of 25% sub judice but likely comes to HOEC.

This one comes down to whether you believe in Elango being able to execute or not. His incentives are clearly aligned without much scope of corp. governance hanky-panky. His track record speaks for itself. Declared 2P reserves will easily last them 7+ years. This doesn’t account for Kharsang, B-80, PY-3 etc. This used to be a one asset play but is de-risking fast through diversification. Accounting remains conservative.The company has a history (albeit short) of underpromising and over delivering.

Here’s hoping it doesn’t dig too many dry holes.

Enjoy the transcript.
HOEC Q2 2019 call.pdf (202.5 KB)

Diclosure: Long


(Saji John) #49

Crude price has gone down by 30% and Gas price increased by 10%. As they have 90% gas and 10% oil, impact of crude coming down is negated…https://twitter.com/CNBCTV18News/status/1075678191107239936


(Manohar T. Patil) #50

HOEC declared Q3 numbers. There is a significant increase in the royalty cost. Not sure if this is going to be reoccuring at this extent or it is appearing as higher due to retro payment and would normalize in subsequent quarters.

@sajijohn, your views on number would be very useful

https://www.moneycontrol.com/stocks/reports/hindustan-oil-exploration-company-financial-results-forquarter-ended-december-31-2018-13702301.html

Disc - Invested


(Saji John) #51

I think the royalty payment is going to be a recurring payment. It used to be paid by the initial allottee of the block(ongc). This article explains it https://timesofindia.indiatimes.com/business/india-business/govt-notifies-incentives-to-oil-psus-in-pre-nelp-blocks/articleshow/65413874.cms. The results are in line with the management commentary. Let us wait for their con call.


(Saji John) #52

(Saji John) #53