Oil India (Q3 FY14)

India Infoline News Service | Mumbai |

OIL India (OINL) reported its net sales for the quarter at Rs27.3bn up 8.5% yoy. The sales were lower than our estimates mainly due to lower than expected production.

CMP Rs461, Target Rs550, Upside 19.3%
  • OIL India (OINL) reported its net sales for the quarter at Rs27.3bn up 8.5% yoy. The sales were lower than our estimates mainly due to lower than expected production.

  • While net realizations for crude oil were at US$52.1/bbl, flat both on a yoy and qoq basis, in rupee terms, net realizations were higher by 14.5% yoy owing to steep depreciation of rupee against the US$. The subsidy burden borne by OINL in the quarter was Rs21.7bn up 12% yoy but was down 3% qoq. OINL's contribution in the upstream share was at 13.6% as compared to 12.9% in Q3 FY13 and 13.4% in Q2 FY14.

  • Crude oil sales volumes declined by 3% yoy and 3.2% qoq. Gas sales volumes were higher by 1.7% yoy and 2.8% qoq. Total oil + OEG volumes declined by 1.3% yoy and 1% qoq.

  • OPM for the quarter came in at 47.3% as compared to 49% in Q3 FY13. As a % of sales, all costs were higher on yoy basis except for statutory levies which declined by 153bps. Staff costs saw a sharp jump of 18.6% yoy leading to 116bps negative impact on margins. Depreciation and depletion was down 52.6% on a sequential basis due to sharp fall in dry well expenditure. Interest expenses surged substantially as the company raised debt to pay acquisition cost of Mozambique block. Other income was lower by 15.2% as available cash balance was lower due to cash utilized for inorganic activity.

  • PAT at Rs9bn was lower than our expectations.

  • We maintain our BUY rating on the stock considering a steep discount to global peers on EV/BoE basis and positive impact on earnings of the gas price hike.

Cost Analysis
As a % of net sales Q3 FY14 Q3 FY13 bps yoy Q2 FY14 bps qoq
Material costs 0.3 0.3 3 0.9 (63)
Personnel costs 13.6 12.4 116 11.9 165
Statutory levies 28.7 30.2 (153) 28.6 6
Other overheads 10.2 8.1 208 7.4 279
Total costs   52.7 51.0 173 48.8 387
Source: Company, India Infoline Research

Result table
(Rs mn) Q3 FY14 Q3 FY13 % yoy Q2 FY14 % qoq
Net sales 27,304 25,168 8.5 28,364 (3.7)
Material costs (76) (63) 20.6 (257) (70.4)
Personnel costs (3,701) (3,121) 18.6 (3,377) 9.6
Statutory levies (7,835) (7,607) 3.0 (8,122) (3.5)
Other overheads (2,779) (2,039) 36.3 (2,096) 32.6
Operating profit 12,912 12,339 4.6 14,513 (11.0)
OPM (%) 47.3 49.0 (173) bps 51.2 (387) bps
Depreciation (2,208) (2,224) (0.7) (4,654) (52.6)
Interest (330) (1) 25,315.4 (3) 10,558.1
Other income 3,220 3,798 (15.2) 3,474 (7.3)
PBT 13,594 13,912 (2.3) 13,330 2.0
Tax (4,564) (4,509) 1.2 (4,293) 6.3
Effective tax rate (%) 33.6 32.4 32.2
Adjusted PAT 9,030 9,403 (4.0) 9,036 (0.1)
Adj. PAT margin (%) 33.1 37.4 (429) bps 31.9 121 bps
Ann. EPS (Rs) 60.1 62.6 (4.0) 60.1 (0.1)
Source: Company, India Infoline Research

Financial Summary
Y/e 31 Mar (Rs m) FY13 FY14E FY15E FY16E
Revenues 99,476 108,180 121,198 126,430
yoy growth (%) 0.9 8.8 12.0 4.3
Operating profit 46,147 48,481 54,839 56,347
OPM (%) 46.4 44.8 45.2 44.6
Pre-exceptional PAT 35,893 34,431 38,785 40,206
Reported PAT 35,893 34,431 38,785 40,206
yoy growth (%) 4.2 (4.1) 12.6 3.7
         
EPS (Rs) 59.7 57.3 64.5 66.9
P/E (x) 7.7 8.0 7.1 6.9
Price/Book (x) 1.4 1.3 1.2 1.1
EV/EBITDA (x) 3.6 3.2 2.6 2.3
RoE (%) 19.4 17.1 17.5 16.5
RoCE (%) 26.2 22.9 23.7 22.5
Source: Company, India Infoline Research

***Note: This is a NSE Chart

 

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