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Research
Cairn India - 4QFY13 Results Update - Motilal Oswal
Posted On : 2013-04-26 10:31:55( TIMEZONE : IST )
Cairn India (CAIR) posted EBITDA of INR33b (+9% YoY, -1% QoQ) for 4QFY13, below our estimate of INR35.6b primarily due to lower realization and higher opex at the Cambay block. Rajasthan realization was USD99.7/bbl (our estimate: USD101.2/bbl) and opex was USD4.9/bbl (our estimate: USD3.1/bbl; 9MFY13 average: USD2.9/bbl).
PAT impacted by exploration write-offs of INR3.7b: CAIR's reported exploration write-offs of INR3.7b included (a) INR2.7b of dry well write-off at Sri Lanka, and (b) INR0.7b of 3D seismic survey expense in South Africa. This was partially offset by (a) lower forex loss at INR28m (our estimate: INR1.5b), and (b) lower than expected tax rate of 2.2% leading to a PAT of INR25.6b (our estimate: INR30.2b).
Rajasthan discount to Brent at ~12%; production averaged ~169kbpd: Rajasthan realization was USD99.7/bbl (v/s USD108.5/bbl in 4QFY12 and USD95.6/bbl in 3QFY13), implying ~12% discount to Brent (v/s 13% in 3QFY13). Gross production averaged 168.5kbpd (v/s 138kbpd in 4QFY12 and 170kbpd in 3QFY13).
Reiterates FY14 Rajasthan exit rate of 200-215kbpd; Mangala field might sustain: The management indicated that if it gets approval to drill 48 infill wells at Mangala, it could sustain/extend the current 150kbpd plateau, implying no decline at Mangala in 4QFY14, contrary to our/consensus expectations. Update on key fields: (a) Mangala: To drill 48 infill wells to sustain/extend plateau of 150kbpd (status: approved by Operating Committee (OC), pending with Management Committee (MC)), (b) Bhagyam: Expects to reach 40kbpd in 2HFY14 (~25kbpd now), ~30 wells pending to be drilled as per the FDP, (c) Aishwariya: Has drilled nine of 11 development wells and plans to reach approved plateau of 10kbpd in next few months, and (d) Barmer Hills: Has submitted development plan to OC and expects to start production by end-FY14 subject to receiving MC approval.
Valuation and view: The stock trades at 5.3x FY14E EPS of INR55.8. Our SOTP value for CAIR stands at INR370/share, implying 26% upside from current levels. Buy.
