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Operationally in-line, triggers in store
Operational results in-line with estimates
Cairn reported its Q3FY12 results with EBITDA of INR23.69bn vs our
est. of INR23.45bn. The company reported a 17% QoQ revenue
growth largely driven by the rupee depreciation. The Mangala field
continued to average 125kbpd in Q3FY12 as well, while the Rajasthan
crude oil realizations stood at USD100.3/bbl, about 8.3% discount to
Brent. The crude pricing showed lower discount to Brent due to the
light-heavy crude spreads contracting this quarter. Cairn’s net profit
came in higher than estimate at INR22.6bn vs our est. of INR19.4bn,
mainly due to the higher forex gains and low effective tax rate of 5%.
Going forward, Cairn has maintained an tax rate guidance of 5-9% in
FY13/14. Additionally, Cairn’s management also guided towards a
gross capex guidance of USD1bn-USD1.25bn for FY13, which should
cover the majority of the investment entailed for pipeline capacity
addition and output enhancement to 240kbpd during CY13/14.
Mangala approval a matter of time, FY12 exit rate at 175kbpd
With the recent Bhagyam field start, the output is expected to be
150kbod by Feb-end. With Cairn guiding towards 175kbpd exit rate
for FY12, we believe that the approval for Mangala field ramp-up from
125kbpd to 150kbpd is near. For FY13, the Aishwarya field start is also
expected in H2CY12; but with the pipeline capacity restricted to
175kbpd, the production from all these three fields may be rationed.
Approvals, field starts to provide newsflow triggers; Accumulate
With the favorable macro variables of robust oil prices and weak
rupee, Cairn has outperformed the Sensex by 20% during the last two
quarters. Though we expect some profit booking due to this in the
near term, we back Cairn to remain strong as a result of positive
newsflow triggers through approvals and field starts. We see the
current levels as attractive for long-only investors as significant
exploration upside can get unlocked during the next two years.
Currently, Cairn factors in USD100/bbl of long-term oil prices, and we
remain buyers of the stock on dips. Accumulate, TP: INR370/sh.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Operationally in-line, triggers in store
Operational results in-line with estimates
Cairn reported its Q3FY12 results with EBITDA of INR23.69bn vs our
est. of INR23.45bn. The company reported a 17% QoQ revenue
growth largely driven by the rupee depreciation. The Mangala field
continued to average 125kbpd in Q3FY12 as well, while the Rajasthan
crude oil realizations stood at USD100.3/bbl, about 8.3% discount to
Brent. The crude pricing showed lower discount to Brent due to the
light-heavy crude spreads contracting this quarter. Cairn’s net profit
came in higher than estimate at INR22.6bn vs our est. of INR19.4bn,
mainly due to the higher forex gains and low effective tax rate of 5%.
Going forward, Cairn has maintained an tax rate guidance of 5-9% in
FY13/14. Additionally, Cairn’s management also guided towards a
gross capex guidance of USD1bn-USD1.25bn for FY13, which should
cover the majority of the investment entailed for pipeline capacity
addition and output enhancement to 240kbpd during CY13/14.
Mangala approval a matter of time, FY12 exit rate at 175kbpd
With the recent Bhagyam field start, the output is expected to be
150kbod by Feb-end. With Cairn guiding towards 175kbpd exit rate
for FY12, we believe that the approval for Mangala field ramp-up from
125kbpd to 150kbpd is near. For FY13, the Aishwarya field start is also
expected in H2CY12; but with the pipeline capacity restricted to
175kbpd, the production from all these three fields may be rationed.
Approvals, field starts to provide newsflow triggers; Accumulate
With the favorable macro variables of robust oil prices and weak
rupee, Cairn has outperformed the Sensex by 20% during the last two
quarters. Though we expect some profit booking due to this in the
near term, we back Cairn to remain strong as a result of positive
newsflow triggers through approvals and field starts. We see the
current levels as attractive for long-only investors as significant
exploration upside can get unlocked during the next two years.
Currently, Cairn factors in USD100/bbl of long-term oil prices, and we
remain buyers of the stock on dips. Accumulate, TP: INR370/sh.
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