Swan Energy
By S Jha
New Delhi, November 14: Ventura Securities in a report for investors has claimed that Swan Energy presents a “huge opportunity” as the company is on an “explosive growth path”. The firm has set a target of Rs 810 in 24 months for Swan Energy.
“Swan Energy Ltd (SWEL) has established an explosive path of capex led growth which should pole vault the fortunes of the company to another level. While the path to growth is in unrelated verticals yet the demand potential/supply constraints of these sectors provide a huge opportunity,” added the securities’ firm in a report.
It argued that “SWEL’s takeover of Reliance Naval & Engineering Ltd (RNEL) via its Rs 2,133 cr NCLT bid marks its foray into the business of ship repair, building and breaking. With this opportunistic foray SWEL has got a readymade asset at the throwaway price”. “SWEL plans to turn itself into one of the biggest private players in the manufacture of naval defence ships and oil & gas vessels. The company is also aiming to be the largest player in green-shipbreaking and hub for global ship repairing. The shipyard has 2.0 mn square feet workshop and the largest drydock in India,” added the research report.
It further stated that “SWEL’s initial task involves completing the construction & sale of 11 ships, which are currently partially built and lying at the shipyard and initiate repair and
fabrication work to generate revenue and cash flow for RNEL, which is facing financial challenges. Furthermore, SWEL intends to start accepting shipbuilding orders from FY25/FY26”.
It may be noted that India and the US have entered into an agreement for ship repair and maintenance cooperation, which the analysts claim will bring opportunities for the shipbuilders here.
“SWAN LNG Pvt Ltd, has successfully onboarded a 5.0 MMTPA FSRU with 4.5 MMTPA of capacity already tied-up. It is in talks with potential customers for tying up a further 5.0 MMTPA which should double its capacity even as it proposes to order another storage unit (FSU). Since the business model is a pure tolling take-or-pay contract, there is no risk for SWEL from fluctuations of commodity prices,” said the report, while setting a target of Rs 810 per share (11.6X FY26 P/E), representing an upside potential of 91.7 per cent over the next 24 months.
In Q2FY24, SWEL’s revenue and EBITDA grew at a YoY rate of 752.6 per cent to Rs 1,223 crore and 18934.3 per cent to Rs 257 crore respectively and EBITDA margins improved by 2007 bps to 21.0%. The company reported a net profit of Rs 166 crore in Q2FY24 compared to the net loss of Rs 32 cr in Q2FY23, added the report.
About The Author
