Selan Exploration Technology
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs94
Current market price: Rs67
Development efforts yield results
We attended the annual general meeting of Selan Exploration Technology Ltd (SETL). The key takeaways from the same are given below.
- Recent efforts to develop oil assets bear fruits: SETL has discovered significant amount of recoverable oil deposits from the four wells drilled at its Bakrol oil field. It has already commercialised two of the oil wells and hopes to enhance the oil production volume by 35-40% during the current fiscal.
- Future plans chalked out: Under the next phase of development of its oil assets, the company has already organised services (like drilling and cementing) to drill four more wells. Given the encouraging findings of the data collected from the development work, SETL plans to induct a strategic partner to generate resources needed for further development of oil assets and also acquire the required technical expertise.
SECTOR UPDATE
Cement
Rain drain
Key points
- The incessant floods in the states of Maharashtra, Gujarat, Rajasthan, Andhra Pradesh and Madhya Pradesh slowed down the growth in cement the dispatches to 4.35% in August.
- A higher base of August 2005 also subdued the growth figures. Last year the floods had affected the cement dispatch figures for July 2005. As a result, the dispatches that had lagged in July 2005 had picked up significantly in August 2005.
- Despite the severe rainfall and floods in the country this year, cement prices remained firm at around Rs205 per bag, up by a very handsome 30%. The southern and western regions registered a very high rise in cement prices on a year-on-year (y-o-y) basis.
- Going forward, we expect the cement dispatches to regain their momentum on the back of a pick-up in the construction activity post-monsoon. Cement prices may rise by Rs5-8 per bag during November 2006.
- This will be extremely positive for cement companies, as their earnings would receive a tremendous boost owing to the double impact of rising volumes and the substantially higher cement realisation.
Download here