Recently I saw a few experts on a TV channel discussing the future of PSUs in 2024. One of the experts mentioned GAIL. His reason was that now that we have seen the virtue of Hydrogen as a green fuel, pipelines would be needed for supplying that. In his opinion, GAIL was well-positioned to exploit the opportunity, as according to him, which other company has the longest pipelines. My research took me to GAIL, Gujarat State Petronet, Mahanagar Gas etc.
But then why not the company that has a name in laying the Pipelines?
So, the trigger is: The emphasis on Hydrogen as clean fuel. Will Likhita take advantage?
According to its Annual Report for the year 21-22 " a widely preferred Oil and Gas Pipeline Infrastructure Services provider, with industry-acclaimed expertise in laying
pipelines, along with construction of associated facilities. We have so far laid over 1000 km of pipelines, in both the public and private sectors."
The latest Annual Report, 22-23 says, “On a standalone basis, the revenue from
operations stood at â‚ą 350.76 Cr compared to â‚ą 257.13 Cr in the previous year, registering a growth of 36.41%. The Company has successfully installed 1500+
kms and ongoing projects that involve laying of 1000+ kilometers of Oil and Gas pipelines.” https://www.likhitha.co.in/img/content/annual-reports/Annual_Report_2022-23.pdf
Again, as per this Annual Report, “Financial Performance I am delighted to share that our company’s growth trajectory has been truly remarkable. In FY 2023, our turnover witnessed an impressive 36.41% increase, reaching ₹350.76 Crores compared to ₹257.13 Crores in FY 2021-22, on a standalone basis. The Company’s performance showcased a commendable PAT growth of 32.06% YoY, amounting to ₹60.04 Crores, surpassing ₹45.46 Crores from the previous year. On a consolidated basis, the Company’s turnover recorded a growth of 41.89%, totalling ₹364.95
Crores for FY 2022-23 compared to ₹257.21 Crores in FY 2021-22. The Company’s PAT witnessed a growth of 30.72% YoY, amounting to ₹60.29 Crores, exceeding ₹46.12 Crores from the previous year.”
“Moving ahead the company has secured signifi cant projects including Cross-country
Pipeline projects from Gail (India) Ltd (GAIL)- 12” x 150 Kms, 18" x 98 Kms, 18" x 125 Kms, Hindustan Petroleum Corporation Ltd (HPCL) - 10" x 90 Kms, and Numaligarh Refi nerey Limited (NRL)- 26" x 190 Kms. Also, the Company has received major
project from IOCL in Nepal - Construction of Fuel depots including Product Storage tanks, station Works (CSW) Mechanical, Electrical, Civil, T&I work at NOC Terminal, (NEPAL) under MAPL Phase-II Project."
Order Book: As of March 31, 2023, our Company’s outstanding order book stands at ₹1,42,593.92 lakhs. The Order Book comprises ₹97,585.55 Lakhs contributed by Cross-country pipelines and associated facilities, ₹32,480.92 Lakhs from City Gas Distribution including CNG Stations, ₹452.79 Lakhs from Operation & Maintenance of
CNG / PNG and â‚ą12,074.65 lakhs from tankage & terminal projects. With a robust order book, we are well-positioned to ensure sustainable growth in our current business portfolio through profitable expansion and execution."
Why it deserves consideration From IGL to Reliance to Adani many companies are going into Hydrogen. IGL, in fact proposes to mix hydrogen with CNG.
I feel that for supplying Hydrogen these companies would need additional network of pipes. I have tried to compare the financials of Likhita with some of the gas companies to see if Likhita, though it is not exactly in gas business, would benefit. Register - Screener
Here are the year-wise financials:
Risk: Surprisingly, the Annual Report does not mention anything about its ambitions, if any, towards hydrogen. Also, from a high of â‚ą337 in Sept, 23, the stock price has fallen to â‚ą220 as of today.
To me, unless there is anything adverse with the functioning of the company, this should provide an opportunity.
Disclaimer: I have made a small investment today to keep a watch on it.
Submitted to more knowledgeable investors for their views on whether I am missing something.