Factors that will boost Cairn India's Q4 earnings

Moneycontrol Bureau

Higher production from its Rajasthan field is likely to boost Cairn India's March quarter numbers which are to be announced on Monday. The privately-owned oil and gas exploration company has three blocks in Rajasthan which saw 22 percent rise in gross production to 1,68,594 barrels of oil equivalent per day (boepd) during Q4.

According to CNBC-TV18 poll, year-on-year sales for the March quarter will rise 18.5 percent to Rs 4,327 on improved volumes. Net profit will also be up 22.1 percent to Rs 2,670 crore. However, EBITDA margin is seen 400 basis points down to 76 percent YoY.

According to the poll, quarter-on-quarter profit will drop on account of forex los due to a weak rupee and a write off of USD 50 million on account of a dry well. In the preceding quarter, the firm had a forex gain of Rs 236 crore on strong rupee as Cairn India has large dollar denominated deposits and hence it could face some translation losses

Key factors to look out for in Q4

Production ramp up from its Bhagyam, Mangala and Aishwarya fields.

Cash balance and clarity on utilization of cash reserves.

Reserves updates with ongoing 100-well exploration programe

Brokerage estimates

Kotak expects Cairn to post 26.8 percent YoY jump in Q4 profit to Rs 2,771.4 crore. Sales will also rise 31.6 percent to Rs 4,826.5 crore on higher production from Rajasthan field, it said in a Q4 preview note.

On the back of production ramp up in Rajasthan fields, IIFL also expects Cairn to post 13.8 percent YoY jump in Q4 profit to Rs 2,733.7 crore. Sales will also climb 18.8 percent to Rs 4,336.1 crore.

Ambit estimates 21 percent rise in sales and around 23 percent jump in profit on assumptions of crude realization to hover around USD 97.6/bbl, around 13.5 percent discount to brent crude price.

Read This: SP Tulsian positive on Cairn India