Oil India (Q2 FY14)

India Infoline News Service | Mumbai |

Crude oil sales volumes declined by 1.6% yoy but improved 7.4% qoq. Gas sales volumes declined 3.3% qoq but improved 1.5% qoq. Total oil + OEG volumes declined by 2.3% on yoy basis but rose 5% qoq.

CMP Rs461, Target Rs550, Upside 19.3%
  • OIL India (OINL) reported its net sales for the quarter at Rs28.4bn up 12.6% yoy. The sales were ahead of our estimates mainly due to higher than expected crude oil realizations.


  • While net realizations for crude oil were at US$52.3/bbl, flat on a yoy basis, in rupee terms, net realizations were higher by 13% yoy owing to steep depreciation of rupee against the US$ (13.4% yoy; 10.9% qoq). The subsidy burden borne by OINL in the quarter was Rs22.3bn up 7.5% yoy and 12.7% qoq. OINL’s contribution in the upstream share was at 13.4% as compared to 13.8% in Q2 FY13 and 13% in Q1 FY14.


  • Crude oil sales volumes declined by 1.6% yoy but improved 7.4% qoq. Gas sales volumes declined 3.3% qoq but improved 1.5% qoq. Total oil + OEG volumes declined by 2.3% on yoy basis but rose 5% qoq.


  • OPM for the quarter came in at 51.2% as compared to 50.2% in Q2 FY13. With higher revenues, employee costs (as % of sales) declined by 37bps yoy impacting the margins. With royalty being denominated in rupee terms and revenues denominated in US$ terms, statutory levies as a percentage of sales appeared lower on a yoy and sequential basis. Other expenditure was higher 17.6% yoy in absolute terms on back of higher support costs. DD&A charges surged 81.8% yoy on back of higher dry well expenditure which was at Rs2,783mn vis-a-vis Rs1,162mn in Q2 FY13.


  • 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
Q2 FY14
Q2 FY13
bps yoy
Q1 FY14
bps qoq
Material costs
0.9
(0.6)
146
(0.8)
167
Personnel costs
11.9
12.3
(37)
16.9
(497)
Statutory levies
28.6
31.0
(236)
32.5
(391)
Other overheads
7.4
7.1
32
12.6
(516)
Total costs
  48.8
49.8
(96)
61.2
(1,236)
Source: Company, India Infoline Research

Result table
(Rs mn)
Q2 FY14
Q2 FY13
% yoy
Q1 FY14
% qoq
Net sales
28,364
25,194
12.6
20,978
35.2
Material costs
(257)
140
(283.7)
161
(259.4)
Personnel costs
(3,377)
(3,093)
9.2
(3,539)
(4.6)
Statutory levies
(8,122)
(7,810)
4.0
(6,826)
19.0
Other overheads
(2,096)
(1,783)
17.6
(2,634)
(20.4)
Operating profit
14,513
12,649
14.7
8,140
78.3
OPM (%)
51.2
50.2
96 bps
38.8
1,236 bps
Depreciation
(4,654)
(2,560)
81.8
(2,665)
74.6
Interest
(3)
(2)
93.8
(9)
(65.6)
Other income
3,474
4,025
BSE 355.75 1.55 (0.44%)
NSE 355.35 1.60 (0.45%)

***Note: This is a NSE Chart

 

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