Accumulate Oil India; target of Rs 1525: PLilladher

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Accumulate Oil India; target of Rs 1525: PLilladher

Prabhudas Lilladher is bullish on Oil India and has recommended accumulate rating on the stock with a target of Rs 1525 in its February 13, 2012 research report.

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Prabhudas Lilladher is bullish on Oil India and has recommended accumulate rating on the stock with a target of Rs 1525 in its February 13, 2012 research report.

"OIL India's (OIL's) Q3FY12 PAT was above our estimates at Rs10.14bn (adjusted for the higher subsidy burden), up 11.7% YoY, while down -10.9% QoQ. Higher-thanexpected performance was due to lower-than-expected other expenditure, coupled with lower-than-expected DD&A cost. OIL's Q3FY12 EBITDA increased 8.7% YoY, while down 17.6% QoQ to Rs13.3bn. Upstream subsidy burden, during the quarter, was at 47.1% v/s 33.33% in Q2FY12. For 9MF12, upstream subsidy burden is at 37.9% which is comparable to 38.8% in FY12. Net realization for the quarter stood at US$57.0/bbl as subsidy burden increased 119.4% QoQ. We do not read much out of the current quarterly performance as the same is based on adjustment of lower subsidy burden for H1FY12. Along with the quarter results, company announced bonus issue in the ratio of 3:2 to boost liquidity. Special dividend of Rs10/share came in as a disappointment. We maintain an 'Accumulate' on the stock."

"Crude oil production at 0.95MMT was lower than our expectation of 0.99MMT, up 2.8% YoY; however, lower on QoQ basis due to political blockage affecting production in Assam. Crude Net realisation during the quarter stood at US$57.0/bbls, down 15% YoY and 34% QoQ. Natural gas production at 0.676 BCM was up 9.7% YoY; however, flat on QoQ basis. Top-line registered growth of 4.5% despite lower net realisation due to higher production, coupled with 13% rupee depreciation over the period. On account of lower-than-anticipated other operating expenditure, EBITDA during the quarter stood at Rs13.3bn v/s our estimate of Rs10.7bn. EBITDA margins during the quarter improved 200bps YoY to 53.5%. DDA cost increased 27% YoY and declined 51% QoQ to Rs2.9bn. and same was lower than our estimate of Rs4.7bn. Other income during the quarter registered a growth of 29.5% YoY on account of higher cash balance with the company. PAT during the quarter stood at Rs10.1bn, registering 11.7% growth on YoY basis. For 9MF12, bottom line grew 27% to Rs30bn, led by better net realisations on oil and higher sale volumes."

"OIL has been delivering impressive performance on the core operating parameters such as production growth, coupled with efficient operations, resulting in low finding, development and lifting cost. Key catalysts affecting the stock price continues to be subsidy sharing and outlook with regards to deployment of significant cash balance. The stock is currently trading at attractive 8.7x FY2013E EPS. We continue to maintain 'Accumulate' on the stock, with a target price of Rs1,525/share (a multiple of 10x FY2013E EPS)," says Prabhudas Lilladher research report.

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