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Cairn India (Q1 FY11) – MP (Target Rs327, Downside 1.2%)

India Infoline Research Team / 11:19 , Jul 28, 2010

CMP Rs331, Target Rs327, Downside 1.2%

  • Net sales jump 310% on rising crude oil production from Rajasthan field, but sales lower than estimates
  • Realization for Rajasthan crude continues to be at10-15% discount to Brent much in line with company’s guidance
  • OPM jumps 1,252bps yoy on account of benefits of operating leverage
  • Net profit much lower than estimates on account of depreciation and interest pertaining to pipeline, which commenced operations in June 2010
  • Downgrade to Market Performer on back of a sharp run-up in stock price
Result table
(Rs m) Q1 FY11 Q1 FY10 % yoy Q4 FY10 % qoq
Net sales 8,406 2,050 310.1 6,928 21.3
Inc/(dec) in stock 670 155 332.2 (700) (195.7)
Personnel costs (189) (215) (12.1) (268) (29.5)
Operating expense (2,188) (440) 397.2 (1,843) 18.7
Admin expense (227) (228) (0.4) (439) (48.2)
Operating profit 6,472 1,321 389.8 3,678 75.9
OPM (%) 77.0 64.5 1252 bps 53.1 2390 bps
Depreciation (1,660) (413) 301.5 (382) 334.9
Exploration w/off (322) (309) 4.1 (1,219) (73.6)
Interest (493) (7) 6,647.9 (19) 2,520.2
Other income 281 1,290 (78.2) 879 (68.1)
Extra ordinary items (413) (1,637) (74.8) - -
PBT 3,866 244 1,482.0 2,938 31.6
Tax (1,052) 210 (601.0) (486) 116.5
Effective tax rate (%) 27.2 (85.9)
16.5
Adjusted PAT 2,814 454 519.3 2,452 14.8
Adj. PAT margin (%) 33.5 22.2 1131 bps 35.4 -191 bps
Ann. EPS (Rs) 1.2 0.2 519.1 1.0 14.7
 Source: Company, India Infoline Research

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