Asian Energy Services Limited - Indian MNC

 

CMP = 90

Asian Energy Services Limited (ASIAN) (formerly Asian Oilfield Services Limited) is an oil, gas and mineral industry service provider. 

In May 2016, there was big turnaround in the fortune of this company came when Oilmax Energy has acquired the company from its previous promoter PE firm Samara Capital. In fact Samara capital has exited the company with loss due to lack of required experience in oil and gas exploration industry. 

https://www.bseindia.com/xml-data/corpfiling/CorpAttachment/2016/11/677CD8C6_3193_447E_BF12_FC2C6FF88144_182627.pdf

Later on company has raised the fund by issuing preferential basis shares @  Rs 80 and Rs 165 to promoters and other public category individual investors.

https://www.bseindia.com/xml-data/corpfiling/CorpAttachment/2016/12/34CB24C7_A53F_49F6_ABF7_BBB0481E935E_123747.pdf

https://www.bseindia.com/xml-data/corpfiling/CorpAttachment/2017/3/dc356743-3255-4bb7-acdf-dd584fa96da7.pdf

Post takeover by Oilmax, Asian has diversified its service portfolio and start offering end-to-end services which extend across the entire upstream value chain, including Geophysical Data Acquisition, Production Facility EPC using the Build-Own-Operate-Transfer (BOOT) model, Turnkey Drilling, and production facility Operation and Maintenance. 

The company is specialised in  2D and 3D seismic data acquisition and entire spectrum of seismic and related services including acquisition, processing and interpretation of seismic data. It has exclusive access to wireless technology for seismic data collection in India. 

Investment Rationale

Asian has competitive advantage over its competitor on cost and quality. It also allow this company to protect and maintain  its market share with good  profitability. All over the world Oil and gas exploration is dominated by multinational companies like Schlumberger, Halliburton, Baker and Hughes etc. Asian is Indian MNC which is providing its services in several countries.

People are the biggest asset for this company which make the whole  difference. Promoters and management team are having very vast  experience in Oil and gas exploration industry with all major domestic and global companies. Company has healthy business relationships with its clients such as Oil and Natural Gas Corporation Ltd (ONGC), Oil India Ltd (OIL), Vedanta etc.  

It has very dynamic board of directors which include industry legends like Dr. Rabi Bastia, a globally acclaimed geoscientist, has been the driving force behind the rapid advancement of India in the oil industry. He is best known for his discovery of the KG D-6 gas field, the second largest find in the country till date. In 2007, Dr. Rabi Bastia was awarded the Padma Shri. It is rare instance that one of India's top civilian awards being given to a private sector executive.

An incredible tale of innovations in the Oil Industry - Dr. Rabi Bastia

https://youtu.be/dr_jAvDmwAE

ASIAN has an impeccable track record of delivering projects on time and in a cost-effective manner, in some of the most challenging environments such as arid deserts, forests and steep mountainous terrains, all the way from deserts in Kurdistan to the wet, hilly, forests in Assam 

ASIAN being the only company to offer 3D wireless seismic technology in the Indian market. It provides comprehensive global resources onshore seismic data acquisition. Cable-less recording technology point-receiver seismic hardware and software enables a full range of imaging services, from cost-effective exploration through to high-quality imaging and reservoir characterization.

India is the world’s third largest energy consumer globally. The Indian Government has already unveiled of the National Seismic Program (NSP) to appraise the country’s reserves, the Indian seismic market has been expanded greatly with ~Rs 5000 Crore of work on offer. 

Diesel demand in India is expected to double to 163 MT by 2029-30. Consumption of natural gas in India will increase by more than three-folds in next 10 years. The industry is expected to attract US$ 25 billion investment in exploration and production by 2022.

https://www.ibef.org/download/Oil-and-Gas-November-2020.pdf

The future for the O&M vertical look promising, with extensions on  current orders and negotiation for more orders currently in the works. Even in a low oil price scenario, ASIAN should continue to see growth in the O&M vertical, as it specialize in being low-cost operators.

Asian has current order book of above Rs 1000 Crore Which gives fair business visibility for next three years. Even in dull market conditions  order flow continues from major oil companies in India. 

https://www.asianenergy.com/pdf/Investor-Relations/Corporate-Announcements/OtherCorporateAnnouncements/LOA-from-OIL-NC-Hills.pdf

https://www.asianenergy.com/pdf/Investor-Relations/Corporate-Announcements/OtherCorporateAnnouncements/BSE-Announcement-ONGC-Award%2026.10.2020.pdf

The company become debt free through repayment of corporate loans and outstanding liabilities, and to get rid of any deadweight, by selling off any non-strategic assets, to clean up its balance sheet.

Asian is run by a very highly qualified management team composed of industry veterans and pioneers, with an average experience of over 35 years working in the industry. The focus under the new management team is to be low-cost operation and maintaining the rigorous standards of quality and performance for its all services on offer. Going forward, company aims to switch from a capital-intensive business model to one in which it avoids owning assets where possible, to keep its capital risk as low as possible. 

Expansion into offering other services like EPC, drilling, and decommissioning, is strategically focused on de-risking the revenue streams. Moreover, it allows the company to offer low-cost integrated management solutions to the Indian and international market.

Conclusion

Company has already made big turnaround within few years after acquisition by new promoter Oilmax energy. In this business, the experience of management team matters most. The company is fortunate enough to have several pioneers and highly talented management team which create strong business moat for company.

The progress of this company left unnoticed due to business slump in 2019 and then COVID-19 situation in 2020 but now it is well set to give very good return in near future. The stock is trading at Rs.90 and it is giving best investment opportunity for one to three years. It can be bought within 15% from suggested price with 10% allocation in portfolio.

Investment Summary - Past Performance and Future Plan

Dear Blog Members,

We have seen that most of the comments are related to decision making for sell, hold and buy on previous suggested stocks. It gives me feeling that some of our blog members are unable to take the timely decision. Even though we have replied several time and given detailed update ‘Review of Investment Strategy’ on 6 May 2018. 

In this post we have analysed data of all stocks posted from beginning of this blog  to till date. We have gone through almost every type of market situation in last six years, we have seen market peak and very severe crash. It gives us fairly true data for our future strategy because sample data is large enough and spread over long period of six years.

Key  Facts & Findings 

• There were total 37 stock suggestion since beginning of blog in Jan 2015.

• Total 23 stocks or 62% of total suggested stocks were able to give 100% return.  

• There were 7 stocks or 19 % of total suggested stocks which have given us  net losses of only 30K.

• There are 7 active stocks or 19 % of total suggested stocks which have not completed yet three years.

• If someone has followed the investment strategy and booked partial profit around 100%  and reinvested the amount again and again then his return on investment will be much higher then who have invested in all stocks and keeping all stocks up till now.

• The 23 stocks which were able to give 100% return, have given 23 chances to reinvest during this period. 

• Pareto’ principle of 80–20 rule is applicable here because 80% of the comments are related  to 7 or 20% of the losing  stocks and only 20% of the comment related to 80% of winning stocks.

• It is hard fact that only 20% of the blog members are able to make decent profit or 80% of the total profit and 80% of the investors are left with merely 20% profit.

Now it is time to move forward with learning of past and try to make 100% of our blog members successful in their investment objectives. Those who want to be successful, It is time for fresh beginning. It needs to keep the things very simple just by following  the below guidelines for next 12 months and have the patience to wait for 36 month. We will go for 6 to 8 stocks in this year. 

1) Buying range for any stock should remain within 15% from suggested price, it gives additional flexibility of 5% from our previous range 10%. It will give chance to enter those who are late due to any reason. 

2) Prefer initial allocation 10 - 15% for each stock. I will give update on it along with respective blog post, it may vary stock to stock from 10 to 15%. It gives us 5 to 8% shareholding in free of cost stocks even after taking out our initial investment by booking partial profit around 100%.

3) Must book partial profit after getting  return around  90 -110 % on your investment. Keep the remaining free of cost shares for long term and reinvest principal amount again. 

4) On average winning stock have given hundred percent return in 12 months but our expectation from every suggested stock is 100 % in 3 years. You can continue to hold free of cost share based on their performance for long-term five years or above for 300 to 500% return.

5) In normal condition, need to stick with our investment decision for 3 years. It means that if any non-performing stock unable to give at least 100% return in 3 years than we must take the decision to sell it and reinvest it again in some other stocks.

6) It is not advisable to buy any non-performing stock after 3 years even though it is trading within buying range. It means that any stock suggestion is valid only for 3 years, if required it will be re-suggested on blog again with modified target.

7) Investment in stock market is subjected to significant risk. Investors must be aware and ready to face it. In case of severe market crash, better to use stop-loss 30% from suggested price to limit the risk on investment. 

8) If you have taken the decision to become successful investor than always be happy and never regret on any decision but learn from every right or wrong decision. 

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.

                                                                                                                 Albert Einstein