Oil India Ltd - Q1FY14 Result Update :: LKP Research

Oil India Ltd - Q1FY14 Result Update

Lower crude oil sales affect Q1 performance

OIL’s Q1FY14 net profit of Rs6.1bn was lower than our estimate of Rs7.7bn mainly on account of lower crude oil sales. Net revenues for the quarter stood at Rs19.8bn (yoy -15.1% qoq -16.6%). OIL’s subsidy burden for the quarter was Rs19.8bn resulting in fall in its net realization to $45.9/bbl (yoy -14.8% qoq -17.2%) which was marginally lower than our estimate of $46.33/bbl. During the quarter, OIL’s oil sales were affected by plant shutdown in NRL. Consequently oil sales declined by 7.5% yoy to 0.865mmt (qoq -1.7%). However, gas sales during the quarter increased by 7.6% yoy to 0.52bcm. Operating profit for the quarter of Rs6.97bn was lower than our estimate of Rs9.1bn while operating profit margin was 35.2%.

For FY15e, we have increased our domestic gas price assumption from $4.2/mmbtu to $8.4/mmbtu and the share of upstream oil PSUs in the overall under recoveries to 65%. We have valued OIL at 9x FY15e earnings, giving a 5.6% discount to our valuation multiple of 9.5x for ONGC on account of smaller size of OIL and the regional risk it faces. We maintain our BUY rating on OIL with a revised price target of Rs589. At the CMP, the stock is trading at 7.3x and 3.7x FY15e EPS and EBITDA respectively.

Actual v/s Estimates

Y/E, Mar (Rs. m)	Q1FY14	Q4FY13	qoq (%)	Q1FY13	yoy (%)	LKP Estimates	Deviation (%/bps)
Revenue	19,809	23,766	-16.6%	23,333	-15.1%	21,463	-7.7%
EBITDA	6,971	8,808	-20.9%	10,962	-36.4%	9,093	-23.3%
EBITDA (%)	35.2%	37.1%	-187 bps	47.0%	-1179 bps	42.4%	-717 bps
PAT	6,091	7,646	-20.3%	9,299	-34.5%	7,694	-20.8%

LKP Research

Gujarat State Petronet Ltd - Q1FY14 Result Update:: LKP Research

Gujarat State Petronet Ltd - Q1FY14 Result Update

Higher tariff boosts Q1 performance, volume continues to disappoint

GSPL’s net profit of Rs1.26bn was higher than our estimate of Rs1.16 on account of higher transmission tariff. Transmission tariff increased by 56.3% yoy to Rs1.41/scm (qoq -20.2%), which was higher than our estimate of Rs1.20/scm. Higher transmission tariff was on account of take-or-pay contract, whereby consumers continued to pay tariff despite transmitting lower gas volumes.

GSPL’s volumes for the quarter declined by 28.9% yoy to 2,015mmscm. The fall in gas transmission volume was due to falling gas production from KG D6. However on sequential basis, transmission volumes increased marginally by 1.1%. GSPL’s operating profit for the quarter stood at Rs2.7bn (yoy +9.2% qoq -17.7%) which was higher than our estimate.

We believe that concerns relating to transmission volumes will be an overhang on GSPL in the near term. However, we note that LNG capacities scheduled to come up by early FY15 could give much needed fillip to GSPL’s gas volumes. We value GSPL on DCF basis given the long term earnings visibility and arrive at a fair value of Rs78 per share. We have used WACC of 11.5% and terminal growth rate of 2% for DCF valuation. We maintain our BUY rating on the stock with a target price of Rs78. At the CMP, the stock is trading at 7.2x and 3.7x FY15e EPS and EBITDA respectively.

Actual v/s Estimates

Y/E, Mar (Rs. m)	Q1FY14	Q4FY13	qoq (%)	Q1FY13	yoy (%)	LKP Estimates	Deviation (%/bps)
Revenue	2,961	3,590	-17.5%	2,676	10.6%	2,690	10.1%
EBITDA	2,691	3,268	-17.7%	2,465	9.2%	2,368	13.7%
EBITDA (%)	90.9%	91.0%	-14 bps	92.1%	-124 bps	88.0%	286 bps
PAT	1,263	1,615	-21.8%	1,248	1.1%	1,159	8.9%

LKP Research

SAIL Q1FY14: Team Microsec Research

SAIL Ltd announced its Q1FY14e results on 14^thAugust, 2013.

The company arrived at net sales of INR10106.12 crore, which was down by 5.02% and 16.91% on YoY and QoQ basis. The EBITDA for the quarter was INR967.26 crore, which was down by 36.17% on YoY basis, but up marginally by 4.7% on QoQ basis. The company posted net profit excluding the exceptional item of INR538.79 crore, which was down by 43.48% on YoY basis, but up by 25.3% on QoQ basis.

Particulars	Actual	Consensus	Var (%)
Net Sales	10106.12	10745.00	-5.95%
EBITDA	967.26	911	6.18%
PAT	538.79	338	59.41%
EPS	1.30	0.84	55.29%

SAIL Ltd Q1FY14 Standalone Results
Particulars	Q1FY14A	Q1FY13A	Q4FY13A	YoY(%)	QoQ(%)
Net Sales	10106.12	10640.73	12162.49	-5.02%	-16.91%
Other Operating Income	161.79	136.77	167.93
Total Operating Income	10267.91	10777.5	12330.42
Total Expenditure	9300.65	9262.22	11406.56
EBITDA	967.26	1515.28	923.86	-36.17%	4.70%
EBITDA Margin (%)	9.42%	14.06%	7.49%	(486)bps	193bps
Other Income	226.17	278.45	208.95
Operating Profit	1193.43	1793.73	1132.81
Depreciation	392.85	401.83	193.62
PBIT	800.58	1391.9	939.19
Interest	191.82	124.88	214.59
Exceptional Items	-87.88	-256.94	16.49
PBT	520.88	1010.08	741.09
Tax	69.97	313.67	294.56
PAT	450.91	696.41	446.53	-35.25%	0.98%
PAT Margin (%)	4.39%	6.46%	3.62%	(207)bps	77bps
PAT excluding non-recurring item	538.79	953.35	430.04	-43.48%	25.3%
PAT Margin (%)	5.2%	8.8%	3.5%	(360)bps	170bps
Equity Capital	4130.53	4130.53	4130.53
Face Value	10	10	10
No. of Outstanding shares	413.05	413.05	413.05
EPS	1.09	1.69	1.08	-35.25%	0.98%
EPS excluding non-recurring item	1.30	2.31	1.04	-43.48%	25.29%
Source: Company Data, Microsec Research. All data in INR crores unless specified.

Regards,

Team Microsec Research