Mr. Harshad Katkar, Institutional Research Analyst, HDFC Securities and Mr. Nilesh Ghuge, Institutional Research Analyst, HDFC Securities
Our BUY recommendation on Oil India with a revised price target of INR 183 is premised on (1) increase in crude price realisation (currently at ~USD 75/bbl) and (2) improvement in domestic gas price realisation (at USD 2.5/mmbtu). We expect oil prices to increase to ~USD 59/61 per barrel in FY22/23E vs. USD 44/bbl in FY21, given global economic rebound post COVID. 4QFY21 revenue was in line with our estimates while EBITDA was 53% below our estimate, owing to high support services of INR 5.1bn (on account of survey expenses). RPAT was above our estimate, owing to higher-than-anticipated other income.
Standalone financial performance: Sales in 4Q was INR 26bn flat YoY. Crude realisation in rupee terms rose 13% YoY to INR 4,195/bbl. EBITDA came in at INR 4.2bn as opex to sales reduced by 5690bps YoY to 83%.
Exceptional loss: The expense of INR 701mn incurred to control the blowout incident of May/June 2020 at Oil India's well in Baghjan. These expenses have been classified as an exceptional item in 4Q. Adjusting for these one-offs, OIL reported a profit of INR 9bn in 4Q.
Standalone operational performance: Crude oil realisation increased to USD 57.6/bbl, +34.4/+13.4% QoQ/YoY; also, gas realisation contracted to USD 1.8/mmbtu, -1.0/-43.3% QoQ/YoY. Oil sales volumes reduced by -2.8/+6.0% QoQ/YoY to 0.70mmt, while gas sales volumes were 0.56bcm, -5.3/+4.5% QoQ/YoY.
Call takeaways: (1) Final dividend was at 15% i.e., INR 1.5/sh. (2) Completion of further NRL stake acquisition of 43.6% was at INR 69.9bn (3) FY22 production target: oil 3.05mmt, gas 3.1-3.2bcm (4) Capex for FY22 is INR 41bn.
Change in estimates: We raise our FY22/23E EPS estimate by 86.7/85.1% to INR 54.2/59.2 to factor in higher crude and gas realisation and incorporating profit contribution from NRL.
We value Oil India's standalone business at INR 96 (5.0x Mar-23E EPS) and its investments at INR 87. The stock is currently trading at 2.5x FY23E EPS.
Shares of OIL INDIA LTD. was last trading in BSE at Rs. 152.55 as compared to the previous close of Rs. 151.2. The total number of shares traded during the day was 164779 in over 2277 trades.
The stock hit an intraday high of Rs. 154.85 and intraday low of 151.2. The net turnover during the day was Rs. 25251750.