Started in 1987, John Energy Limited is Mehsana - Gujarat based company and one of India’s leading private onshore Oil & Gas service providers catering to upstream and midstream players in India and overseas. Their service offerings include land-based drilling, well completion services, workover drilling, integrated contract services, gas compression services and gas processing services, including gas dehydration services to the companies engaged in the onshore exploration, development and production of Oil & Gas including NOCs and private sector E&P players. As on December 31, 2017, JEL owns a fleet of 34 rigs comprising of 19 Drilling Rigs and 15 Workover Rigs. Company currently owns 7 rigs with capacities above 1,000 HP which are capable of drilling depths 5,000 meters and beyond. Their Rigs have high mobility and are equipped with advanced components such as top drives enabling them to execute high skills drilling including pad drilling, deviation wells and horizontal drilling. JEL also offers integrated contract services to upstream players whereby they bundle various services like including drilling fluid services, mug loggings services, wire line logging services, cementing services, casing services, wellhead completion services, surface facility services, direction drilling services with drilling and workover services. JEL also offers midstream services i.e. natural gas compression services and natural gas dehydration services to players, engaged in the production and transportation of natural gas in India. Company owns five gas compressor units and they have been awarded various natural gas compression contracts with various public and private sector oil and gas companies. They currently own one gas dehydration package and have been awarded a gas dehydration contract at Odalaveru Onshore Terminal in Andhra Pradesh. Company owns a central warehousing facility which includes rig maintenance facilities and a multi-functional workshop, located at Jagudan, Ahmedabad-Mehsana Highway, Gujarat. This workshop houses a repairing and overhauling station where they undertake in-house maintenance and repair jobs of rigs, a fabrication / refurbishment station, a centralised chemical yard and a consumables warehouse to stock the assets and consumables. They have also established a preventive maintenance system which is linked with ERP to ensure timely alerts to monitor equipment maintenance based on their usage, from time to time, thereby reducing downtime on the rigs. Company's aggregate Order Book as of January 15, 2018 was Rs 7,808.58 million (including contract value on hand, and LOA), comprising Order Book in the work-over and drilling rigs services, integrated contracted services, air and gas compression services and gas dehydration services. As of January 31, 2018 JEL employed a total of 1,537 employees in various disciplines including drilling, workover, production, technical, logistics, finance and administration, all of whom are their permanent employees. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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