Oil and gas services provider ELSA is positioned for growth as it expands into technology-driven solutions, particularly robotics, automation and digital services, according to an IPO note by Rakuten Trade.
The research house initiated coverage on ELSA with a BUY recommendation and a fair value of RM0.33, compared with its IPO price of RM0.23, implying a potential upside of about 43%.
Rakuten Trade expects ELSA to record core net profit attributable to shareholders (PATMI) of RM11.9 million for FY2026 and RM13.9 million for FY2027, supported by its expansion plans, strong credentials within Malaysia’s oil and gas industry and growing robotics business.
ELSA is a PETRONAS-licensed provider of products and services to Malaysia’s oil and gas sector, primarily operating as a main contractor managing projects from planning and execution to delivery.
The group relies on its in-house project managers and site engineers to oversee project implementation, ensuring quality control, operational efficiency and timely completion.
Expanding Robotics and Automation Capabilities
A key growth driver for ELSA is its push into technology-enabled businesses, particularly its robotics and engineering solutions segment.
Part of the IPO proceeds will be allocated towards strengthening its Autonomous Underwater Vehicle (AUV) deployment capabilities and acquiring additional drones for inspection and surveillance activities.
Rakuten Trade said these investments would allow ELSA to:
- undertake more projects internally;
- improve operational efficiency; and
- strengthen its competitiveness in the fast-growing automation and robotics market.
The expansion into robotics is expected to support demand from oil and gas operators seeking more efficient inspection, monitoring and maintenance solutions.
Strengthening Oilfield Services and Digital Solutions
Beyond robotics, ELSA plans to enhance its oilfield services and digital solutions businesses through the hiring of specialised consultants and technical personnel.
The additional manpower will enable the company to scale up operations and pursue larger contracts, supporting its growth pipeline.
ELSA is also looking to expand its digital solutions offerings, including cybersecurity, cloud services, digital learning platforms and industrial digitalisation.
Rakuten Trade noted that oil and gas operators are increasingly adopting digital transformation initiatives to improve operational efficiency and enable remote monitoring capabilities.
The company currently works with 27 multinational technology partners, allowing it to introduce new technologies and specialised solutions without significant research and development expenditure.
These partnerships also enable ELSA to broaden its service portfolio and capture opportunities in emerging industrial technology segments.
Strong PETRONAS Linkage and Balance Sheet
Rakuten Trade highlighted ELSA’s PETRONAS-related credentials as a key advantage, providing the company with industry access and credibility.
The research house said ELSA maintains a healthy financial position with a net cash balance sheet and is expected to remain in a net cash position following its listing.
This provides the company with financial flexibility to support expansion initiatives and pursue new projects.
Growth Outlook Remains Positive
Rakuten Trade believes ELSA’s growth prospects are supported by three key factors:
- Aggressive expansion plans through robotics, automation and digital solutions;
- Strong PETRONAS credentials within the oil and gas ecosystem; and
- Rapidly growing robotics business driven by increasing demand for technology-enabled industrial solutions.
The research house derived its RM0.33 fair value based on a 10 times price-to-earnings (PER) multiple applied to FY2027 earnings, in line with comparable companies of similar size.
“ELSA’s transition towards technology-driven services positions the group to benefit from the increasing adoption of automation and digitalisation within the energy sector,” Rakuten Trade said.
The company’s IPO proceeds are expected to support its next phase of expansion, strengthening its
