Asian Energy Services LtdQ3 FY19Oil

Asian Energy Services Ltd

Q3 FY19 Earnings Call Analysis

Management growth scorecard

Revenue

Category 4

Margin

Category 3

Fundraise

N/A

Order

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Revenue guidance

Category 4

→Asian Oilfield Services expects revenue growth of around 5% to 10% in FY20.
→They aim to maintain EBITDA margins around 17% to 18%, with efforts to improve margins going forward.
→The company envisions adding more orders, especially in seismic business segments in India and abroad.
→Contracts worth Rs. 1,500 Crore under OLAP 1 seismic acquisition are likely to be awarded within six months.
→Asian plans to complete current seismic and EPC orders steadily over the next 2 years.
→International projects like Amni in Nigeria are expected to contribute significantly, with $40 million revenue expected over the next four quarters.
→Asian aims to diversify revenue streams so that no single business or client contributes more than 30-40% by FY23.
→The robust performance momentum of Q2FY20 is expected to continue into FY21.
→Bidding actively in seismic tenders from major operators such as Cairn India, ONGC, and Oil India.

Category 3

→Revenue growth expected around 5% to 10% in FY20 (Page 8).
→EBITDA margins to be maintained around 17% to 18%, with attempts to improve margins going forward (Page 8).
→Robust performance momentum from Q2FY20 expected to continue in H2FY20 and FY21 due to current order book (Page 3).
→Over next 1.5 years, focus on delivering seismic projects and completing the MOPU upgrade project in Nigeria (Page 3).
→Order book execution spread mostly over next two years; Rs. 550 Crore executable in two years (Page 5).
→International projects like Amni International ($52 million project) expected to generate approximately $40 million revenue over next four quarters (Page 7).
→Thanks to cost optimization and better operating performance, Q2FY20 profit after tax turned positive at Rs. 6.3 Crore vs loss in last year (Page 3); indicates improving profitability trajectory.
→Potential for growth backed by expansion in seismic business with new tenders in India (Page 3, 7).

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→The company did not explicitly mention any immediate plans for new fundraising through debt or equity in the call.
→However, they indicated the presence of a very robust balance sheet to support scaling up their businesses over the next four to five years.
→Capex for seismic equipment (Rs. 20 to 40 Crore) may be funded through internal accruals, not external fundraising.
→Discussion about listing on the National Stock Exchange is underway but no concrete steps or timelines have been provided.
→The management’s focus is on leveraging internal resources and operational bandwidth rather than raising fresh funds at this moment.

→As on September 30, 2019, the total outstanding order book is Rs. 765 Crore.
→Order book split: EPC 36%, Seismic 38%, O&M 26%.
→Rs. 55 Crore revenue booked in Q2 from Q1 order book of Rs. 850 Crore, adjusted for Rs. 20 Crore due to force majeure in NC Hill project.
→Net executable order book as of Q2 stands at approximately Rs. 795 Crore.
→Of the Rs. 760-795 Crore order book, Rs. 200 Crore spans ten years; the remaining Rs. 550 Crore expected to be executed over next two years.
→Company is awaiting results of multiple tenders and is hopeful to win selective seismic projects under OLAP rounds.
→Seismic contracts worth Rs. 1,500 Crore likely to be awarded in India within next six months.
→Order book expected to be filled for next two years within next two quarters.

Yes

→Asian Oilfield Services has existing infrastructure capable of executing seismic orders worth Rs. 300 Crore annually.
→They may require Rs. 20 to 40 Crore of capex in the future to acquire additional seismic equipment.
→This capital expenditure is planned to be funded through internal accruals.
→The company intends to invest strategically in BOOT (Build, Own, Operate, Transfer) projects for longer duration, stable cash-flow projects.
→There is a focus on diversifying revenue streams and bidding selectively for seismic projects under India's OLAP 1, 2, and 3 rounds.
→No mention of retention money or mobilization advance as a capital investment requirement.
→Overall, capex is planned but limited and aimed at scaling seismic business over the next 4-5 years using a robust balance sheet.

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