Shares of Swan Energy have surged up over 45% in the last 30 days and analysts at Ventura see the stock going further up over the next two years.
The Swan Energy Analysts: Analysts at Ventura initiated coverage on the stock with a “buy” rating and a target price of ₹810. The target suggests an over 80% upside from the stock’s last closing price of ₹449.45.
The Swan Energy Thesis: The brokerage said that the company is embarking on a trajectory of capex-led growth, positioning the company for significant advancements. The firm highlighted the company’s strategic move into the ship repair, building, and breaking business through its acquisition of Reliance Naval & Engineering Ltd via a ₹2,133 crore NCLT bid.
This opportunistic foray not only diversifies the company’s portfolio but also provides a ready-made asset at an attractive price, the brokerage added. As per the analysts, the company is strategically positioning itself to become a major private player in the manufacture of naval defence ships and oil & gas vessels. The company aims to lead in green shipbreaking and establish itself as a global hub for ship repair.
For now, Swan Energy plans to complete the construction and sale of partially built 11 ships that it got in the acquisition, generating revenue and cash flow for the troubled Reliance Naval.
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Another vertical where the company is seeing an opportunity is the domestic gas market. Recognizing the expanding gas market in India and the government’s goal to increase natural gas’s share in the energy mix, it is strategically entering the LNG sector.
The company is setting up a 5.0 million metric tons per annum (MMTPA) FSRU-based LNG terminal, with plans for expansion by an additional 5.0 MTPA FSU at Jafarabad port. The analysts added that this location strategically connects key markets in West Asia, Africa, and Europe, positioning SWEL as a significant player in energy trading.
Swan LNG, a subsidiary, has secured 4.5 MMTPA capacity bookings under a 20-year take-or-pay contract from major oil & gas companies and refineries, ensuring a robust long-term revenue stream. With the growing demand for natural gas in various sectors, including fertilizers, petrochemicals, industrial units, and city gas distribution (CGD) companies, analysts anticipated SWEL’s LNG terminals to witness full utilization in the coming years.
Price Action: Swan Energy’s share price was down 1.67% to trade at ₹441.95 in the early hours of trading on Monday.
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