Oil India (Q1 FY14)

India Infoline News Service | Mumbai |

OIL India (OINL) reported its net sales for the quarter at Rs21bn down 14% yoy. The sales were below our estimates mainly due to lower than expected crude oil volumes and realizations.

CMP Rs474, Target Rs565, Upside 19.2%
  • OIL India (OINL) reported its net sales for the quarter at Rs21bn down 14% yoy. The sales were below our estimates mainly due to lower than expected crude oil volumes and realizations.


  • Crude net realizations at US$45.9/bbl were down by 14.8% yoy and 17.2% qoq in dollar terms. Depreciation of rupee against the US$ (3.4% yoy; 2.8% qoq) partly helped restricting the decline in realisations in rupee terms. While the discount remained at US$56/bbl, the fall in realisation was on back of sharp correction in average crude oil prices. The subsidy burden borne by OINL in the quarter was Rs19.8bn moderately down 1.7% yoy. OINL’s contribution in the upstream share was at 13% as compared to 13.4% in Q1 FY13 and 12.5% in Q4 FY13.


  • Crude oil sales volumes declined by 7.5% yoy and 1.7% on qoq basis. Gas sales volumes improved by 7.6% yoy and 2.2% qoq. Total oil + OEG volumes declined by 2.3% on yoy basis and were flat qoq.


  • OPM for the quarter came in at 38.8% as compared to 47.2% in Q1 FY13. With weaker production, employee costs (as % of sales) surged by 336bps yoy impacting the margins. Other expenditure was higher 42.8% yoy in absolute terms on back of higher support costs. DD&A charges almost doubled yoy on back of higher dry well expenditure which was Rs1,007mn vis-a-vis Rs99mn in Q1FY13.


  • We maintain our BUY rating on the stock considering a steep discount to global peers on EV/BoE basis.

Cost Analysis
As a % of net sales
Q1 FY14
Q1 FY13
bps yoy
Q4 FY13
bps qoq
Material costs
(0.8)
0.1
(89)
(0.9)
15
Personnel costs
16.9
13.5
336
14.8
202
Statutory levies
32.5
31.6
95
29.6
295
Other overheads
12.6
7.6
499
17.0
(443)
Total costs
61.2
52.8
842
60.5
68
Source: Company, India Infoline Research
 
Result table
(Rs mn)
Q1 FY14
Q1 FY13
% yoy
Q4 FY13
% qoq
Net sales
20,978
24,396
(14.0)
24,718
(15.1)
Material costs
161
(29)
(655.9)
226
(28.7)
Personnel costs
(3,539)
(3,296)
7.4
(3,670)
(3.6)
Statutory levies
(6,826)
(7,707)
(11.4)
(7,315)
(6.7)
Other overheads
(2,634)
(1,845)
42.8
(4,199)
(37.3)
Operating profit
8,140
11,520
(29.3)
9,759
(16.6)
OPM (%)
38.8
47.2
(842) bps
39.5
(68) bps
Depreciation
(2,665)
(1,403)
90.0
(2,394)
11.3
Interest
(9)
(3)
190.3
(20)
(55.0)
Other income
3,517
3,655
(3.8)
BSE 355.75 1.55 (0.44%)
NSE 355.35 1.60 (0.45%)

***Note: This is a NSE Chart

 

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