Cairn India - 4QFY13 Result Update - Nirmal Bang

- Cairn India (CIL) reported net profit of Rs25,636mn (down 18%QoQ, up 17%YoY) for 4QFY13 compared to Bloomberg consensus estimate of Rs27,750mn and our estimate of Rs29,212mn.

- The profit was below our estimate due to: (1) Production volume of 202kbpd compared to our estimate of 205kbpd, and (2) Dry well expenses of Rs2,658mn at Sri Lanka block and Rs726mn at South Africa block.

- We have retained our Buy rating on CIL with a revised target price of Rs370 from Rs373 earlier on account of: (1) All negatives on account of aggressive volume guidance priced in, and the confidence of the management to achieve 200kbpd- 215kpbd of production, (2) Commencement of exploration activity in the Rajasthan field likely to result in reserves upgrade, and the company's plan to complete 50% of the exploration exercise in FY14E, (3) Multiple positive catalysts in the next 12-18 months on production ramp-up, (4) Valuation and expectations turning reasonable, (5) The stock price discounting Brent crude oil price with exploration upside at US$84/bbl in the long run, implying recovery of ~1bboe of reserves, and (6) The CIL stock being cheap on most valuation parameters.

Source : Equity Bulls

Keywords