Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

ADD on Oil India - Excess provisions drag EBITDA - HDFC Securities

Posted On: 2020-07-02 04:42:05

Mr. Harshad Katkar & Mr. Nilesh Ghuge, Institutional Research Analyst, HDFC Securities.

Oil India (Q4FY20 Results Review): Excess provisions drag EBITDA. ADD
(TP Rs 100, CMP Rs 94, MCap Rs 102bn)

Our ADD recommendation on Oil India with a TP of INR 100 is premised on rich OCF yield of 28/36% and divided yield of 3/7% over FY21/22E. We believe the current valuations are contextually low at 3.7x FY22 PER.

View on the result: EBITDA was below estimates owing to 2.6x higher opex.

Standalone financial performance: Sales for 4QFY20 stood at INR 26bn (-16/-12% YoY/QoQ). EBITDA stood at INR (11bn) owing to jump in Opex by 2.1/2.4x YoY/QoQ to INR 32bn led by (1) Impairment provision of INR 13bn for overseas assets, and (2) Dry well provision in KG basin of INR 3bn. APAT recovered to INR 7bn (+49/76% YoY/QoQ) owing to 40% YoY and QoQ dip in depreciation and depletion cost to INR 3bn as well refund of tax in 4Q. FY20 Sales/EBITDA/APAT stood at INR 121/26/24bn (-12/-53/-28%) largely owing to 16% fall in crude realisation to INR 4,028/bbl.

Standalone operational performance: 4Q crude oil realisation was USD 50.2/bbl (-19/-16% YoY/QoQ) whereas gas realisation was USD 3.2/mmbtu, -2/+1% YoY/QoQ. Oil sales vols were 0.75mmt, -3/+1% YoY/QoQ. Gas sales vols were 0.53bcm, -14/-11% YoY/QoQ. In FY20, crude vol/realization declined 2/16% to 3.1mnT/USD 57.4 while gas realization jumped 9% to USD 3.4/mmbtu and vols declined 3% YoY to 2.4BCM.

Adjustments in 4Q: (1) OIL opted for the new tax rate of 25.2% from FY20 and availed its deferred tax credit in 4Q. Accordingly, APAT comes to INR We adjusted INR 7bn post adjusting for INR 2bn of benefits availed. (2) Current tax of INR 3,534bn has been reversed in 4Q as a settlement of pending Direct Tax disputes.

Outlook for FY21/22: We expect crude oil production volumes to remain subdued at 3.0mmt in FY21 (vs. 3.1mmt in FY20) as Covid-19 has adversely impacted demand. In FY22, production should bounce back to 3.3mmt in FY22. Natural gas volumes dip frpm 2.4bcm in FY20 to 2.2 bcm in FY21 and recover to 2.4bcm in FY22. Oil prices should remain muted at USD 32/37 vs. USD 61 in FY20 given weak global macros, despite production cut from OPEC and non-OPEC countries. Gas realisation should remain flat at USD 2.7/mmbtu in FY21/22E (USD 2.8/mmbtu in FY20).

View on the balance sheet: Debt spiked by 18% YoY to INR 27bn as did Net Debt/EBITDA and Net Debt/Equity ratios to 2.6/0.3x from 0.7/0.1x in FY19.

Change in estimates: We cut our EPS est. for FY21E by 31% to INR 5.6 on account of (1) 3% lower revenues, and (2) 16% higher employee costs.

Our TP is INR 100 (6x EV/e Sep-21E standalone earnings and INR 77 from investments). The stock is currently trading at 4.4x FY22 EV/e.

Shares of OIL INDIA LTD. was last trading in BSE at Rs.94.8 as compared to the previous close of Rs. 93.7. The total number of shares traded during the day was 98427 in over 1463 trades.

The stock hit an intraday high of Rs. 95 and intraday low of 92.5. The net turnover during the day was Rs. 9240394.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

IPO Review - Computer Age Management Services - ICICI Securities

Company Update - EIH Ltd - ICICI Securities

Gladiator Stocks - Godrej Properties - ICICI Securities

Company Update - Dr Reddy's Laboratories - ICICI Securities

Gladiator Stocks: Pharma Thematic - ICICI Securities

Company Update - Housing & Urban Development - ICICI Securities

Covid Recovery Pulse - E-Way bill generation shows recovery signs with auto volumes flat - ICICI Securities

Quant Pick - UltraTech Cement - ICICI Securities

Lupin & Cipla - Positive News - Angel Broking

Sterling and Wilson Solar Ltd - 106.71 MW order win - Angel Broking

Dr. Reddy's Laboratories - Settles Revlimid litigation in US - ICICI Securities

Natco Pharma - Natco to launch first generic Revlimid - ICICI Securities

Solar Industries - Overseas and defence key to profitability - ICICI Securities

Federal Bank - Strengthening liability muscle; fees & charges revised upwards - ICICI Securities

HCL Technologies Mr. Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd


I-direct Instinct - Intellect Design Arena

P&G Health - Company Update - ICICI Securities

Relaxo Footwears - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Bata India - Mr. Amarjeet Maurya- AVP - Mid Caps, Angel Broking Ltd

Listing of Happiest Minds Technologies - Angel Broking

Dr. Reddy's Lab - Sep 17, 2020 - Angel Broking

VA Tech Wabag - Uphill task ahead; dilution at discount valuation - ICICI Securities

Polymer price tracker - PVC price hikes continue unabated - ICICI Securities

Brigade Enterprises - Resilience amid turbulence - ICICI Securities

Apollo Hospitals Enterprises - Recovering well from COVID-19 impact - ICICI Securities

NTPC - Sustainability targets encouraging - ICICI Securities

Gladiator Stocks - Oberoi Realty - ICICI Securities

Gladiator Stocks - Automotive Axles - ICICI Securities

Quant Pick - IDFC First Bank - ICICI Securities

Company Update - Jammu & Kashmir Bank - ICICI Securities

India Aviation Data - August 2020 - Angel Broking

Shree Cement - Higher volumes to offset lower prices - ICICI Securities

Apollo Hospitals - Q1FY21 Result Update - ICICI Securities

Refining & marketing - Oil price fall boosted GRMs, to push marketing margins up - ICICI Securities

Mr. Deepak Jasani, Head of Retail Research views on FICCI National Executive Committee Meeting with Reserve Bank of India Governor Shaktikanta Das

India trade deficit for August 2020 - Angel Broking

Chemcon Chemicals IPO - Mr. Keshav Lahoti - Associate Equity Analyst, Angel Broking Ltd

CAMS IPO - Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd

August 2020 Trade Data - Acuité Ratings & Research

Wim Plast - Q1FY21 Result Update - ICICI Securities

Company Update - Mishra Dhatu Nigam - ICICI Securities

Stock Tales - Laurus Labs - ICICI Securities

Stock Tales - Granules India - ICICI Securities

Stock of the day - Chalet Hotel - Target INR 200 - Angel Broking

Upgrade to ADD on Dr. Reddy's Labs - Improved visibility in the US business - HDFC Securities

Monetary Policy post CPI inflation numbers for August 2020 - Angel Broking

HUDCO - Q1FY21 Result Update - Angel Broking

Update on Steriscience pharma - Angel Broking

Covid-19 vaccine development by AstraZeneca - Angel Broking

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019