Multibagger stock: Jindal Drilling & Industries Limited (JDIL), a part of the D.P. Jindal Group, is a leading company in offshore drilling in India’s Oil & Gas sector for over 30 years. Jindal Drilling shares are one of the multibagger stocks in 2021 that have been giving stellar return in 2022 as well. As per Jindal Drilling share price history, this stock has surged from near ₹94 to ₹217 in last one year, logging around 130 per cent rise in this period. In year-to-date (YTD) time, it has surged near 55 per cent. However, HDFC Securities sees further upside in this multibagger energy stock.
According to HDFC Securities report, Jindal Drilling share price is still strong from fundamental perspective and the multibagger stock may go up to ₹283 apiece levels from current ₹217 per share levels, logging around 30 per cent upside in next months.
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Highlighting the valuations that may fuel Jindal Drilling share price rally in future; HDFC Securities said, “JDIL, in Nov 2021, acquired an Offshore Jack-up rig ‘Jindal Supreme’, from Venus Drilling Pte. Ltd for $ 16.75 million. Acquisition of rig would be beneficial as the hire charges associated with the rig will now not be borne by the company. Acquisition of rigs against loans to the JV reflects better capital allocation management. Similar acquisition from its group company in near future would be EPS (Earnings Per Share) accretive and makes a case for re-rating of the stock. The company is focused on improving its cost efficiency and operating margins. The acquisition of two of their rigs in the last couple of years is an initiative in that direction.”
“On the back of strong demand of oil & natural gas and its increase in prices; the charter rates under renewal contracts would see a sharp jump thereby improving its top-line and bottom-line. The company is also looking for international business expansions and exploring new contracts for jack-up rigs, directional Drilling and Mud logging units outside India. Going forward, the management is confident of a 20-25 per cent hikes in rig rates which will kick in once three contracts are renewed in FY23. Timely contract renewal of the Jack up rigs with ONGC and likely no disruption in operation due to the pandemic can help enhance the revenue and expand profit margins in the coming years,” brokerage added.
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On its suggestion to positional investors in regard to Jindal Drilling and Industries Ltd shares; HDFC Securities said, “We expect revenue/EBITDA to grow at CAGR of 15.9 per cent/40.5 per cent over FY21-FY24E. We think the base case fair value of the stock is ₹245 and the bull case fair value is ₹283 over the next 2-3 quarters. Investors can buy the stock in the band of ₹214-226 apiece levels and add more on dips to ₹187 to 190 band.”
