Analysis of Asian Oilfields Services Limited

Economy Analysis

The Indian GDP ( as of June 2010 ) stands at $ 1.26 Trillion. The GDP per capita stands at $ 2500. Despite the planetary lag India ‘s GDP has seen consistent and stable growing, turning between 7-9 % over the last 5 year. The concern for the current disposal is lifting rising prices which presently stands at an dismaying rate of about 15 % . Besides India faces a current history shortage of $ 90 Bn. Besides being one of the taking developing states, India attracts a just sum of FDI capital influx, for the current twelvemonth the FDI inflow bases at Rs. 123378 Crores.

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India is a stable democracy, but terrorist act and its relationships with its neighbours continue to be a job supplying an suppression among the other subjects about safety in India. Besides, the hapless substructure continues to impede growing of India. The state has a big working population, but is executing ill on societal development and despite the being of a strong cognition base, outgo on R & A ; D is unequal. A wide legal and regulative model exists in the state to run the state but concerns sing the execution remain. Similarly, the overplus of environmental Torahs in the state is held back by slack execution.

ECONOMIC INDICATORS

Indexs

Unit of measurements

2004

2005

2006

2007

2008

2009

GDP, Changeless 2000 Prices, US Dollars

US Dollars ( Millions )

594749

648763.1

711768.3

776751.7

832533.3

886647.9

GDP per capita

US Dollars

553.01

593.26

640.24

687.47

725.21

760.37

Inflation

Percentage

2.74

3.26

6.9

8.07

8

8.3

Balance of Trade ( Total Exports – Entire Imports )

US Dollars ( Millions )

-20488.63

-38599.72

-43956.45

-59812.28

-11450.82

-35633.49

Unemployment Rate

Percentage

8.28

8.36

8.43

8.43

9.22

10

DEMOGRAPHIC INDICATORS

Indexs

Unit of measurements

2004

2005

2006

2007

2008

2009

Population

Millions

1075.47

1093.56

1111.71

1129.87

1148

1166.08

Entire figure of families

Millions

202.72

206.13

209.55

212.73

216.4

220.03

Urban Population as % Entire Population

Percentage

28.5

28.7

28.98

29.26

29.54

29.82

Gender Ratio

Ratio

106.5

106.47

106.44

106.4

106.36

106.32

Doctors per 1000 people

Number

0.6

0.6

0.6

0.6

0.6

0.6

The Indian economic system is regulated by pecuniary and financial policies of regulating organic structures. The biggest challenge of Indian economic system Inflation is being tackled by RBI by increasing the involvement rate. There had been a lessening in CRR and SLR to inculcate the liquidness in market during the liquidness crunch which is expected to be rolled back in hereafter.

Industry Analysis

The oil & A ; gas market consists of the activities of geographic expedition, development, production, refinement, storage, transit and selling of oil & A ; gas.

The entire gross of $ 76.3 billion was generated in India market in 2009. The entire gross reduced by 31.4 % in 2009 with regard to 2008, wherein it had increased by 45.4 % in 2008. A compound one-year growing rate ( CAGR ) of 10.3 % for the period crossing 2005-2009 was observed. The grosss for this industry section is dependent on the planetary oil monetary values, therefore there was a blunt addition in 2008 and subsequent in 2009.

In footings of volume the market ingestion increased with a CAGR of 4 % during 2005-2009, to make a sum of 1.4 billion BOE in 2009. In 2009 the market volume increased by 2.3 % . The public presentation of the market is forecast to speed up, with an awaited CAGR of 12.4 % for the five twelvemonth period 2009-2014, which is expected to drive the market to a value of $ 136.9 billion by the terminal of 2014.

One of the specific sections of the oil and gas industry is Oil Exploration and Allied Services. These companies provide geographic expedition and good development services to the manufacturers. They provide services in footings of proving, seismal analysis, informations analysis etc. In India 16 companies are listed under this class.

There has been a steady rise in the entire grosss with an one-year CAGR of approximately 11.77 % . The entire gross for the 16 houses last twelvemonth was Rs. 927 Crores ( an addition of 8.23 % over last twelvemonth ) .

The undermentioned graphs depicts the grosss of the industry has been increasing with about in the similar manner as that of GDP of India. The growing rate for the past four old ages are besides demoing similar tendency.

Industry Structure and Performance

The oil and gas market chiefly comprises companies which are normally big and extremely vertically integrated. They operate at big economic systems of graduated table and benefit from it. The initial investing is besides really high due to the demand of extremely proficient equipments and machinery and skilled labour for the operations. Therefore, presence of such powerful officeholders and the capital intensive nature of the industry raise the entry barrier really high.

2008 experienced increased demand for specialist equipment and services as trade good monetary values went really high which pushed boring companies to research trade goods deposits antecedently deemed excessively dearly-won, hiking providers grosss. However in 2009 the trade good monetary values fall drastically and the hereafter of the monetary values varies with sentiment.

Parameter

Threat Level

Remark

Menace of entry

Moderate

Government Regulations and the entry and involvement of the foreign participants

Competition between bing rivals

Strong

Presence of Government houses and big houses

Pressure from replacement merchandises

Weak

No other merchandise available at the present monetary value. As the renewable resource are developed or the oil monetary values increases, menace may increase

Dickering power of purchasers

Weak

Presence of high figure of single every bit good as institutional purchasers

Dickering power of providers

Moderate

Requirement of the specialised equipments

Company Analysis

Asiatic Oilfield Services Limited was started in 1992 with an purpose to supply service to the oil and gas industry. Since the origin Asian Oilfield Services Limited has gained broad scope of experience by put to deathing several Seismic Data Acquisition, Seismic Job Services, Shot Hole Drilling and Up Hole Drilling undertakings. Market capitalisation of the company has increased from Rs. 7.9 Crores in 2005 to Rs. 77.92 Crores in 2009.

The gross has besides increased to Rs. 72 Crores with an addition of 50 % with regard to last twelvemonth. The reported net net income has come down to Rs. 5.25 Crore from Rs. 9.96 Crores last twelvemonth.

The EPS is Rs. 4.66.

Fiscal Ratios

Employee turnover Ratio

The industry is capital intensive industry with demand of batch of working capital at any given clip. The company has high current assets with regard to the several industry. The stock list turnover ratio for the house is really high in the scope of 1300 where in the industry norm is about 14. Similarly, the fixed plus turnover ratio is approximately 3.5 times the industry norm.

Debt Equity Ratio

The debt equity ratio of the company has come down to.08 wherein the mean industry figure is 0.32. The lessening in 2009 was significant as it came down from 0.24 to 0.08. Similar is the instance with the long term debt, with the industry norm at 0.14 and company at 0.08.

DuPont Analysis

Ratio

Industry/ Company

2009

2008

2007

2006

2005

2004

2003

2002

2001

A PBIDT/Sales ( % )

Industry

42 %

44 %

45 %

50 %

44 %

46 %

49 %

47 %

44 %

Company

18 %

32 %

29 %

14 %

13 %

16 %

28 %

9 %

6 %

A Sales/Net Assetss

Industry

0.48

0.68

0.51

0.47

0.70

0.55

0.78

0.63

0.66

Company

0.92

0.74

1.43

1.13

0.99

1.36

0.79

0.54

0.43

A PBDIT/Net Assetss

Industry

0.20

0.30

0.23

0.23

0.30

0.25

0.38

0.30

0.29

Company

0.17

0.24

0.42

0.16

0.13

0.21

0.22

0.05

0.02

A PAT/PBIDT ( % )

Industry

58 %

57 %

60 %

58 %

63 %

60 %

62 %

57 %

51 %

Company

42 %

58 %

54 %

36 %

31 %

33 %

50 %

3 %

13 %

A Net Assets/ Net Worth

Industry

1.35

1.47

1.35

1.33

1.30

1.33

1.43

1.45

1.22

Company

1

1.04

1.24

1.22

1.15

1.08

0.99

1.12

1.06

A ROE ( % )

Industry

16 %

23 %

18 %

18 %

27 %

22 %

29 %

20 %

17 %

Company

7 %

19 %

42 %

7 %

5 %

7 %

11 %

0 %

0 %

From DuPont analysis we found that the return on equity for the company is far below than the industry criterions. The operational net income in this industry is about 42 % wherein the company is runing at merely 18 % . The ground for the same is bulk of the participants are really big and use economic system of graduated table to better their net income borders.

Company is besides holding really low PAT/ PBIDT ( % ) with regard to the industry criterion, therefore proposing high depreciation costs and high involvement. The last twelvemonth, the net income border besides dipped due to the payment of loans, therefore taking to the lessening in operating net income.

Further, Sahara Mutual Fundss have besides invested in the company by purchasing portions deserving Rs. 14.5 Crores.

Decision

“ Good Buy for long term ”

The company has shown strong public presentation over the last two quarters. The fluctuations in the monetary value are affected by the alteration in oil monetary values. As the oil monetary values are bound to increase the portion monetary values will travel up.

Further, the company is in consolidation stage wherein they are working on efficiency betterment along with some of the long term investing in some clients. The monetary values are expected to travel up.

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