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BUY Shiv Vani Oil – Nirmal Bang Sec

December 29, 2007

We initiated coverage on Shiv Vani Oil in September and the stock has went past our target price. Nirmal Bang Securities [Big Bull during the Dot Com Days] is now initiating coverage on the stock.

Shiv Vani has a strong order book of Rs 3150 crore and is expcted to strengthern by another Rs 4000 crore.Increase E&P Capital Expenditure to boost up demand for Oil field service providers.The Indian market size of Seismic services is estimated to be over Rs. 2000 Crores. and it is expected to grow by 50-60% once the NELP VII blocks will be awarded in early next year. Shiv Vani will be a major beneficiary in these contracts.

Shiv-Vani is the only Company in India to offer integrated solution for Coal Bed Methane (CBM) projects. Its Asset Owned Model enhances margins.

Valuation & Recommendation:
Expect Shiv‐Vani Oil & Gas Exploration services Ltd to report a CAGR of 39% in sales during the FY05 to FY10E on the back drop of strong order book position and unprecedented demand for oil field services followed by boom in oil & gas exploration sector. At CMP of Rs. 558 the stock is trading at 25x and 15.7x its FY08E and FY09E earnings. Nirmal Bang recommends a BUY with a target price of Rs 1191 in 12 months.

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