Cairn India - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Cairn India (CIL) reported a better-than-expected performance due to higher-than-expected production. We maintain our Buy rating on the stock.
CIL reports strong top-line growth: CIL's top line increased by 19.6% yoy to Rs.4,440cr (above our expectation of Rs.3,761cr) led by higher crude oil sales volumes. During the quarter, CIL's working interest production volumes stood at 127,226boepd vs. 99,640boepd in 1QFY2012 and 107,292boepd in 4QFY2012. However, gross crude oil realization decreased by 4.6% yoy and 7.6% qoq to US$101.0/bbl.

Forex gain lifts reported PAT: Operating margin contracted by 686bp yoy to 78.7% due to increase in cess and profit petroleum. Nevertheless, operating profit grew by 10.0% yoy to Rs.3,492cr. The company recorded an exceptional gain of Rs.866cr on account of forex fluctuation during 1QFY2013. Hence, reported net profit grew by 40.3% yoy to Rs.3,826cr. Excluding this exceptional gain, adjusted net profit grew by 8.5% yoy to Rs.2,960cr (above our estimate of Rs.2,479cr).

Outlook and valuation: CIL has the infrastructure in place to ramp up production to meet its targets. Hence, we expect production to gradually increase in the coming quarters to reach a capacity of 175kbopd by FY2013 and 205kbopd by FY2014. Further, there are various untapped exploratory upsides in Barmer Hills and other fields waiting to be developed. Hence, we maintain our Buy rating on the stock with a target price of Rs.380.

Source : Equity Bulls

Keywords