Alphageo

Alphageo (India) Limited is the largest onshore integrated seismic service provider in the private sector and enjoys a market leadership in seismic survey. There were major expectations from the company in terms of its Q2FY15 performance but the numbers disappointed hugely. The stock yesterday closed 10% lower. It ended the second quarter with a net loss at Rs.1.45 crore compared to a bumper profit of Rs.13 crore in Q1. But YoY, the loss is lower than Rs.2.45 crore loss of Q2FY14. Thus Q2 seems to be a seasonal loss-making time. YoY, its net sales rose over 12 times at Rs.4 crore but what really did it in was the 76% rise in operating costs, led by the almost 6 times jump in survey and survey related expenses. The company had a tax write-back of Rs.81 lakh and that helped stem the loss to that extent.

The good news here is that its H1FY15 net profit of Rs.12 crore has already surpassed the FY14 net profit of Rs.11 crore, which is thanks to the super Q1 numbers. The company has lumpy revenues in specific quarters and it is important to note that the sector (and hence company) has entered a pricing upcycle. Domestic and international business looks promising with stable political environment at home and emphasis on oil security in emerging economies of Asia and Africa. As we had mentioned in our Stock Recommendation section, based on the company’s domain expertise and strong revenue visibility, annualised FY15 consolidated revenue is estimated at Rs. 325 crore and expected EPS of about Rs. 200.