OIL India - Disappointing operational performance - Centrum

OIL's Q3 operating performance was hampered by bandhs and blockages in Assam which are now easing. Crude and natural gas production thus declined by 4.1% and 2.3% QoQ respectively. Despite lower production performance was bettered due to lower subsidy burden which stood at Rs19.5bn in Q3. DDA was lower QoQ and YoY at Rs2.2bn primarily due to lower dry well write-offs.

The management indicated that they are currently reviewing two acquisition proposals and hoping to complete the deals in FY14E. Also, investments from overseas assets will start contributing meaningfully from FY14E onwards. The company will also benefit from policy actions in the domestic market on diesel and natural gas price hikes.

We have thus upgraded the stock from Neutral to 'Buy'.

Source : Equity Bulls

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