Motilal Oswal has maintained neutral rating on Cairn India
with a target of Rs 380 in its January 22, 2013 research report.
“Cairn India (CAIR IN) reported 3QFY13 EBITDA at INR32.9b (in-line), up 29% YoY but down 5% QoQ. While PBT was lower than our est. at INR32b (v/s est of INR35b) due to lower other income at INR1.8b (v/s est of INR2.5b) and lower forex gain at INR2.4b (v/s est of INR4.2b), adj. PAT was in line at INR31.6b (+ 40% YoY, +36% QoQ) due to lower tax rate at 1%.”
“Rajasthan realization stood at USD95.6/bbl (v/s USD100/bbl in 3QFY12 and USD97.6/bbl in 2QFY13), implying ~13% discount to Brent price (v/s 11% in 2QFY13). Gross production from Rajasthan block averaged 170kbpd in 3QFY13. Recently govt. approved the policy which will allow exploration in the development blocks. Cairn was already 'drill ready' and now plans to commence exploration in 4QFY13 and will drill ~100 exploration wells over the next 3 years (~30 per year) in the Rajasthan block. Bhagyam field's well deliverability is below expectations and Cairn will have to drill additional wells to reach the plateau of 40kbpd (MC has approved 15 additional wells over 81 in FDP). Management guides for Aishwariya field production to start in March-13 (v/s earlier expectation of June-13) and Bhagyam ramp-up to 40kbpd in 2HFY14 (v/s earlier expectation of Mar-13), thus taking its overall production to ~200kbpd by Mar-14. Cairn expects to achieve its 240kbpd production guidance through 1) likely plateau increase in Aishwariya from 10 to 20-25kbpd and 2) other smaller fields.”
“We raise FY14E/FY15E EPS by 1.4%/3.7% to factor (1) increase in Brent price assumption from USD105/100/bbl to USD110/105/bbl and (2) marginally lower Rajasthan production average by 2% in FY14 led by a slight delay in Bhagyam ramp-up. The stock trades at 6.2x FY14E EPS of INR54.8. We are rolling over our FY15E target price to INR380/sh. Neutral,” says Motilal Oswal research report.
Non-Institutions holding more than 90% in Indian cos
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