Cairn India - 4QFY2013 Result Update - Angel Broking

For 4QFY2013, Cairn India (Cairn) reported a lower-than-expected profitability, however, sales were in line with our expectations. We maintain our Buy rating on the stock.

Higher volumes drive Cairn's top-line growth: Cairn's top-line increased by 19.5% yoy to Rs. 4,363cr (in-line with our expectation of Rs. 4,393cr) due to higher volumes and higher realizations in INR terms. Gross production averaged 202kbopd (+12.0% yoy) during the quarter. Although gross crude oil realization decreased by 9.1% yoy to US$100.6/bbl, INR depreciation against the USD more than offset its impact. The EBITDA, however, grew by only 9.3% yoy to Rs. 3,258cr and EBITDA margin contracted by 698bp yoy to 74.7% due to higher costs.

Adjusted PAT grows 6.8% yoy: The company recorded an exceptional loss of Rs. 3cr on account of forex fluctuation during 4QFY2013. Excluding this exceptional loss, the adjusted net profit grew by 6.8% yoy to Rs. 2,566cr (below our estimate of Rs. 2,819cr). The reported net profit grew by 17.3% yoy to Rs. 2,564cr.

Outlook and valuation: Cairn has the infrastructure in place to ramp up production to meet its targets. Hence, we expect the company's production to gradually increase in the coming quarters to reach a capacity of 200kbopd by FY2014. Further, there are various untapped exploratory upsides in Barmer Hills and other fields waiting to be developed. Hence, we recommend a Buy rating on the stock with a target price of Rs. 345.

Source : Equity Bulls

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