RNRL AS A BLUE CHIP BET

We have selected Reliance Natural Resources (RNRL) as the ‘Blue chip’. It is widely believed that this company’s shares of which were given free of charge to RIL shareholders in terms of the restructuring of the group on account of the division between the two Ambani brothers – Mukesh and Anil, has been floated to transport gas from the RIL gas fileds in the Krishna Godavari basin in Andhra Pradesh to the proposed Dadri power project in UP and as there is a dispute over the pricing for gas, the outlook of the company is hazy.
But this is a wrong perception. Though the company was originally promoted with that development in mind and the matter is in the court. However, please note that The company is striving to emerge as a key private player in the field of energy with widespread interest in the exploration and production of oil, gas and coal. And the company has started taking concrete steps in this direction. Just consider these developments:
l RNRL-led consortium has won four coal bed methane (CBM) blocks through a competitive bid process. Within just a year, it has emerged as the second largest CBM player in the country.
l Under the new exploration licensing policy, the company, in consortium, has won one oil and gas block in the state of Mizoram.
l Ignoring the gas price dispute, the company has applied to lay a 1600 km cross country pipeline for evacuating gas from RIL’s Krishna Godavari basin to the Dadri power plant at an investment of Rs. 14000 crore.
l The company has sought petroleum ministry’s permission to start its own city gas distribution networks in Mumbai, Delhi and the NCR region comprising Noida, Ghaziabad, Gurgaon and Faridabad. This will need an investment of Rs.2000 crore.
l For the Dahanu power station (REL), the company has undertaken a job to wash 2.4 million tones per year raw coal and also to supply imported coal.
l The company has applied for the allocation of 8 coal blocks in the states of Orissa, Jharkhand, West Bengal and Maharastra.
Of course, this is just the beginning and the company has miles to go. But the field of energy has tremendous growth prospects. Though for the very first year of operations (15-month period ended March 2007), it has earned a net profit of Rs. 29.85 crore on a sales turnover of Rs. 250 crore, we expect the figures to shot up by four to five times within the next four years.
Shares of the company are available around Rs. 40 (face value Rs.5) and may even decline by 10 to 15 per cent if there is a slide in the overall market sentiment. But if you have patience, these shares will yield fantastic appreciation after four years. The company is just coming up. Catch it young.

courtesy:doc uday