Oil India - Result Update - Kotak

In Q2FY13 Oil India Ltd. has reported higher than expected PAT mainly on account of 1). Higher gas sales volume (up by 13% QoQ), 2). Higher pipeline transportation income (up by 46.4% QoQ), and 3). Higher other income (up by 7.6% QoQ to Rs.5.2 Bn).

- Management has guided to maintain its crude oil and natural gas production guidance for FY13E. We expect crude oil production of ~3.92 MMTPA and natural gas production of ~3.3 BCM for FY13E. Implementation of EOR/IOR techniques in OINL's existing producing fields will contribute to higher volumes.

- For FY13E, we expect OINL's net crude realization to be USD$ 53.90/bbls (Brent crude ~$110/bbls) and ~USD$ 52.5/bbls (Brent $105/bbls) for FY14E. We believe one should focus more on OINL's net realization.

- We expect OINL to report an EPS of Rs. 71.1 FY13E and Rs.73.5 FY14E.

- On the basis of our estimates, the stock at current market price of Rs.475 is attractively valued at 3.3x EV/EBIDTA, 6.5x P/E and 5.9x P/cash earnings on the basis of FY14E. We recommend ACCUMULATE on OINL with a revised price target of Rs.510.

Source : Equity Bulls

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