Ambit Capital views on Smallcap Oil & Gas stocks

GARWARE OFFSHORE

Aggressive fleet additions concomitant with firm day rates, is likely to propel Garware Offshore Services (GOSL) from being a small-sized Offshore Supply Vessel (OSV) owner to one of the major player in the segment. Driven by this expansion we expect the company to clock revenue and net profit CAGR of 36% and 48% over FY08-FY11E.

GUJARAT GAS

Gujarat Gas (GGCL), a niche player in city gas distribution, has reaped the benefits of a quantum jump in natural gas usage in Gujarat, driven by rapid industrialisation over the last few years. We believe that supplies should normalise by CY09e to 4mmscmd. At the current market price, the stock is quoting at an undemanding valuation of 8.0x P/E and 3.4x EV/EBITDA our CY09e earnings.