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http://content.icicidirect.com/mailimages/ICICIdirect_OILIndia_Q3FY12.pdf
H i g h e r s u b s i d y s h a r e i m p a c t s p r o f i t a b i l i t y…
Oil India (OIL) declared its Q3FY12 results with revenues at | 2,589.8
crore, EBITDA at | 1,428.2 crore and PAT of | 1014 crore. The results
were below our expectations mainly on account of higher upstream share
at 47.1% of gross under-recoveries (our estimate: 33.33%). OIL’s share of
the total upstream companies’ subsidy burden was 12.1% in Q3FY12 at
| 1853 crore. Higher upstream share resulted in net crude oil realisations
decreasing by 15.1% YoY and 33.9% QoQ to US$57.02/barrel in Q3FY12.
The EBITDA margin grew 430 bps QoQ to 55.1% mainly on account of
lower staff costs and other expenditure. The depreciation expense
declined by 51.1% QoQ to | 288.7 crore, mainly due to lower write-offs of
dry wells. We have assumed the subsidy sharing ratio of upstream
companies at 38.7% for FY12E and FY13E. We have maintained Oil
India’s share among upstream companies at 12.2%, going forward. We
recommend a BUY rating on the stock, with a price target of | 1490,
which implies 9.3x average of FY12E and FY13E EPS.
ƒ Highlights of the quarter
The crude oil production increased 2.8% YoY to 6.88 mmboe in
Q3FY12 while the gas production increased 9.7% YoY to 676
mmscm. Other income increased by 35.4% YoY to | 375.6 crore on
account of higher cash balance with the company. The company
has also announced a bonus issue where it will reward the
shareholder with three shares for every two held in the company.
Additionally, the company has declared a dividend of | 10 per share,
in addition to the interim dividend of | 25 per share paid earlier.
V a l u a t i o n
Oil India continues to perform well operationally, which is reflected in its
crude oil and gas sales growth. We believe Oil India’s strong reserve base
reflects significant growth potential. OIL’s strong balance sheet in terms
of cash position and negligible debt provides support for value accretive
overseas acquisitions. The stock is trading at 8.4x FY12E and 8.0x FY13E
EPS of | 156.3 and | 164.0, respectively. We recommend a BUY rating on
the stock, with a price target of | 1490.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_OILIndia_Q3FY12.pdf
H i g h e r s u b s i d y s h a r e i m p a c t s p r o f i t a b i l i t y…
Oil India (OIL) declared its Q3FY12 results with revenues at | 2,589.8
crore, EBITDA at | 1,428.2 crore and PAT of | 1014 crore. The results
were below our expectations mainly on account of higher upstream share
at 47.1% of gross under-recoveries (our estimate: 33.33%). OIL’s share of
the total upstream companies’ subsidy burden was 12.1% in Q3FY12 at
| 1853 crore. Higher upstream share resulted in net crude oil realisations
decreasing by 15.1% YoY and 33.9% QoQ to US$57.02/barrel in Q3FY12.
The EBITDA margin grew 430 bps QoQ to 55.1% mainly on account of
lower staff costs and other expenditure. The depreciation expense
declined by 51.1% QoQ to | 288.7 crore, mainly due to lower write-offs of
dry wells. We have assumed the subsidy sharing ratio of upstream
companies at 38.7% for FY12E and FY13E. We have maintained Oil
India’s share among upstream companies at 12.2%, going forward. We
recommend a BUY rating on the stock, with a price target of | 1490,
which implies 9.3x average of FY12E and FY13E EPS.
ƒ Highlights of the quarter
The crude oil production increased 2.8% YoY to 6.88 mmboe in
Q3FY12 while the gas production increased 9.7% YoY to 676
mmscm. Other income increased by 35.4% YoY to | 375.6 crore on
account of higher cash balance with the company. The company
has also announced a bonus issue where it will reward the
shareholder with three shares for every two held in the company.
Additionally, the company has declared a dividend of | 10 per share,
in addition to the interim dividend of | 25 per share paid earlier.
V a l u a t i o n
Oil India continues to perform well operationally, which is reflected in its
crude oil and gas sales growth. We believe Oil India’s strong reserve base
reflects significant growth potential. OIL’s strong balance sheet in terms
of cash position and negligible debt provides support for value accretive
overseas acquisitions. The stock is trading at 8.4x FY12E and 8.0x FY13E
EPS of | 156.3 and | 164.0, respectively. We recommend a BUY rating on
the stock, with a price target of | 1490.
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