Oil India Ltd - Q1FY14 Result Update
Lower crude oil sales affect Q1 performance
OIL’s Q1FY14 net profit of Rs6.1bn was lower than our estimate of Rs7.7bn mainly on account of lower crude oil sales. Net revenues for the quarter stood at Rs19.8bn (yoy -15.1% qoq -16.6%). OIL’s subsidy burden for the quarter was Rs19.8bn resulting in fall in its net realization to $45.9/bbl (yoy -14.8% qoq -17.2%) which was marginally lower than our estimate of $46.33/bbl. During the quarter, OIL’s oil sales were affected by plant shutdown in NRL. Consequently oil sales declined by 7.5% yoy to 0.865mmt (qoq -1.7%). However, gas sales during the quarter increased by 7.6% yoy to 0.52bcm. Operating profit for the quarter of Rs6.97bn was lower than our estimate of Rs9.1bn while operating profit margin was 35.2%.
For FY15e, we have increased our domestic gas price assumption from $4.2/mmbtu to $8.4/mmbtu and the share of upstream oil PSUs in the overall under recoveries to 65%. We have valued OIL at 9x FY15e earnings, giving a 5.6% discount to our valuation multiple of 9.5x for ONGC on account of smaller size of OIL and the regional risk it faces. We maintain our BUY rating on OIL with a revised price target of Rs589. At the CMP, the stock is trading at 7.3x and 3.7x FY15e EPS and EBITDA respectively.
Actual v/s Estimates
| Y/E, Mar (Rs. m) |
Q1FY14
|
Q4FY13
|
qoq (%)
|
Q1FY13
|
yoy (%)
|
LKP Estimates
|
Deviation (%/bps)
|
| Revenue |
19,809
|
23,766
|
-16.6%
|
23,333
|
-15.1%
|
21,463
|
-7.7%
|
| EBITDA |
6,971
|
8,808
|
-20.9%
|
10,962
|
-36.4%
|
9,093
|
-23.3%
|
| EBITDA (%) |
35.2%
|
37.1%
|
-187 bps
|
47.0%
|
-1179 bps
|
42.4%
|
-717 bps
|
| PAT |
6,091
|
7,646
|
-20.3%
|
9,299
|
-34.5%
|
7,694
|
-20.8%
|
LKP Research
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