Do you know from which company Asian got an order for that 570 Cr? In the presentation/Press release, the name is not disclosed. I dont know why. But anyways, just in case if there has been management interaction on that front.
I don think quality of trade receivables are a concern here. Since they are either ONGC, OIL India and their history suggests no issues. OALP itself was a big reform, I am surprised the time it took to implement on the ground. Hopefully, now the flow has started.
Disc: Invested.
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We need to understand businesses like Alphageo. The company is a leader in seismic data acquisition and processing. Around 10 years ago, it was doing a topline of around 30-40 crores, now it is doing a topline of around 400 crores. The earning is bound to be lumpy as orders are large and come at intervals.
The company remained focused in its niche in onshore seismic survey only. In good times, it commanded an EBIDTA of around 35%. Lately, the company is starting to diversify into other forms of Geophysical services for mineral explorations.
Scale of seismic survey orders are increasing. Recently Asian Oilfiled claims to have received an order worth 640 crores on its website. They also declared an order of 570 crores in latest investor presentation on 17.02.2020. Their order book is more than 900 crores with seismic work constituting 56% of the order book.
Alphageo presentation is not informing about order book. However, for the past 4-5 years, Alphageo had a lions share on seismic data work as obvious from the comparision of financial results of these two companies.
Shareholding changes in December quarter is showing sign of things turning better. Promoter shareholding has gone up from 44.93% to 45.22%. HNI individual shareholding [more than 20K shares] has gone up from 3.72 to 4.59%. Looks like informed purchases are happening in the company.
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Recently the presentation has been uploaded and the order book was 160 Cr as on December 31st 2019. Post which around 240 Cr orders have been received so around 400 Cr order book can be considered.
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The cash on their balance sheet is what gives me comfort and they have performed quiet ok in difficult times, since now the orders are flowing in the next few quarters will be critical. The performance for this FY till date is pretty bad but thatâs the nature of the business. Pure value buy.
In terms of progressive and self dependent economy, companies like AlphaGeo and Asian Oilfields should have more work. Indiaâs production wells per X Sq Miles are way too low as compared to countries like US. These companies are highly untapped, big time.
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Can any one throw some light on outcome of income tax raid which conducted six months back
Alphageo (India) Limited is in receipt of Notification of Award (NOA) of Contract from Vendanta Limited for 2D and 3D Seismic Data Acquisition Services in Assam for estimated Contract Value of Rs. 184 Crores (inclusive of taxes).190597d5-f536-4647-b341-1b7f1f37fa68(1).pdf (394.9 KB)
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No update. But I think these matters take time to resolve and might take a long time. Unless âVivaad se Vishwasâ plays some role there.
So now orders are ~ Rs. 600 Crores.
I think the main point which looms over the company always is the availability of further order.
I have experienced it first hand (by investing in it at higher levels) that there is always an optimism regarding the receipt of new orders but they might never come in time. So investing in this stock might give u a very bumpy ride or two.
If somehow we are able to develop a clarity with regard to stability of order coming in then we might make a case in investing in the company otherwise it will be the same thing all over again that there will be no visibility after say 2 years.
disc:
i might be biased as have burned my fingers earlier.
I am holding the stock till date.
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Thanks Amit sir for your reply
Disc:- I was invested but take a exit on news of IT raid, booked heavy loss
Very true. But, that happens in all cyclicals. Timing plays a very important role. In August, 2019; the stock touched a low of 160. Thereafter, it has hovered around 200, good orders announcements.
The stock has a long history of dividend payment. Last year it paid a dividend of Rs. 8. With the results, we may expect the dividend to continue. That is around 4% dividend yield. With 600 crores order book, we can have a visibility of next 2 years of topline.
Presently the market is dominated by smart investors. They understand the lumpy nature of cyclicals earning and are ready to sell even on the day the company declares an order, greater than its declared order book in last quarter.
But things change. New investors do come in the market, to invest in cyclicals at higher level. They pay the fee of learning investment; and investors invested at bottom prices do get an opportunity to exit.
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Alphageo (India) Limited is in receipt of Notification of Award (NOA) of Contract from Oil India Limited for 2D and 3D Seismic Data Acquisition and Processing Services in Oilâs OALP Areas of Mahanadi Basin, Odisha for an estimated Contract Value of Rs. 76.67 Crores (exclusive of taxes).
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=c5e1f2b4-f5f9-4143-bb2d-c6cf326bebcc
From around $35 a barrel on March 13, 2020, Brent oil prices have jumped 91 per cent to around $67 a barrel now. If the surge continues, Alphageo is a good stock to play the crude. If crude stays above 65, exploration activity shall be revived in a big way in India and Alphageo will be an obvious beneficiary.
Nevertheless, I cant predict commodity prices. In my thinking, alphageo wins big if crude surge continues, and does not lose much if the surge does not continue. That way, it can be a good investment.
[Disclosure- Invested]
I dont think there is any connection between the revenue/profitability link with crude prices. If there are any orders not being released on account of non-viability - yes. But that is unlikely. Also they are in service business so not much direct impact on profitabiity.
Alphageo business is completely dependent on exploration activity in India. Last year ONGC demanded from GOI a floor price of USD 45, as production of crude is unviable below this price. A link to the article- ONGC seeks crude price assurance of $45 per barrel, cuts capex by 15% | Business Standard News
Undoubtably, Alphageo is in service sector but the services depends upon exploration activity. If the crude price remains at elevated level, exploration activity increases thereby resulting in greater order flow to service providers.
Lately, Alphgeo has also started providing services to other exploration activity than that of crude/gas; however that activity is much smaller as of now.
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Highly recommended read up on OALP
Especially OALP VI
Disclosure:long
Alphageo declared excellent set of numbers for the Quater and Year ending March 2021. Board also declared Rs 8 as Dividend.
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Any news of new orders, as it moved up nearly 33% jump in 3 days?
With alphageo trading at 2.33 times free cashflow/ EV(as per latest half yearly report),the wise ones are invited to draw their own conclusions.
55 crore fcf vs 127 crore Enterprise value
Disclosure long
P s consider comparing to Asian energy services.
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