Oil India Ltd (Q4 FY14)

India Infoline News Service | Mumbai |

OIL India (OINL) reported its net sales for the quarter at Rs19.5bn down 21.2% yoy.

CMP Rs567, Target Rs663, Upside 17.0% 
  • Net sales at Rs19.5bn were much lower than estimates as production volumes were substantially lower

  • Oil production was at 0.79MT a decline of 9.6% yoy and 11.9% qoq while gas production was at 0.62bcm a decline of 3.7% yoy and 8.1% qoq

  • Net realizations for crude oil were at US$47.25/bbl a fall of 14.8% yoy and 9.3% qoq as under recoveries were higher by 26.9% yoy an 8% qoq, gas realizations were at Rs6,462 and increase of 13% yoy and 0.7% qoq

  • OPM was substantially below estimates at 24.5% owing to sharp fall in volumes and jump in staff costs and overheads

  • We maintain our BUY rating with a revised price target of Rs663 as the company would be a big beneficiary of the expected freeing of diesel prices and ensuing gas price hike

Result table
(Rs mn)
Q4 FY14
Q4 FY13
% yoy
Q3 FY14
% qoq
Net sales
19,482
24,718
(21.2)
27,304
(28.6)
Material costs
93
226
(58.7)
(76)
(222.4)
Personnel costs
(4,115)
(3,670)
12.1
(3,701)
11.2
Statutory levies
(6,006)
(7,315)
(17.9)
(7,835)
(23.4)
Other overheads
(4,681)
(4,199)
11.5
(2,779)
68.4
Operating profit
4,774
9,759
(51.1)
12,912
(63.0)
OPM (%)
24.5
39.5
(1,498) bps
47.3
(2,279) bps
Depreciation
(2,244)
(2,394)
(6.3)
(2,208)
1.6
Interest
(345)
(20)
1,626.5
(330)
4.5
Other income
6,014
3,694
62.8
3,220
86.8
PBT
8,199
11,040
(25.7)
13,594
(39.7)
Tax
(2,542)
(3,394)
(25.1)
(4,564)
(44.3)
Effective tax rate (%)
31.0
30.7
33.6
Adjusted PAT
5,656
7,646
(26.0)
9,030
(37.4)
Adj. PAT margin (%)
29.0
30.9
(190) bps
33.1
(404) bps
Ann. EPS (Rs)
37.6
50.9
(26.0)
60.1
(37.4)
Source: Company, India Infoline Research

Production much weaker than expected

OIL India (OINL) reported its net sales for the quarter at Rs19.5bn down 21.2% yoy. The sales were lower than our estimates mainly due to lower than expected production. Net realizations for crude oil were at US$47.3/bbl, down by 14.8% on a yoy basis and 9.3% on qoq basis, in rupee terms, net realizations were lower by only 2.8% owing to steep depreciation of rupee against the US$. The subsidy burden borne by OINL in the quarter was Rs23.4bn up 27% yoy and 8% qoq. OINL’s contribution in the upstream share was at 12.3% as compared to 12.5% in Q4 FY13 and 13.6% in Q3 FY14. Crude oil sales volumes declined by 10.9% yoy and 12.5% qoq. Gas sales volumes were also lower by 3.3% yoy and 9

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