Cairn India Lags Estimates, Reports 18% Decline In Profit
DSIJ Intelligence / 25 Jul 2013
The result has disappointed the street as it was expecting a 6.6% drop in revenues as against the 8.5% reported by the company.
The Vedanda group company Cairn India has reported a 8.5% drop in its revenues to Rs 4062 crore. Its net profit for the quarter dropped by 18% to Rs 3127 crore. The company has also reported a drop in the EBITDA margins. During the quarter, Cairn India reported forex gains of Rs 682 crore which also have shown a YoY decline of 21%. The other income of the company rose by 44% to Rs 89 crore.
The result has disappointed the street as it was expecting a 6.6% drop in revenues and a 12% rise in the profits on a YoY basis. The performance of the company has improved if seen sequentially as it has reported a 22% rise in net profit. The EBITDA margins have also improved by 533 basis points.
During the quarter, the company has seen increased costs associated with unsuccessful exploration which rose from Rs 35 crore a year ago to Rs 100 crore. Also, its depreciation rose by 18% to Rs 519 crore on a YoY basis. The company has reported EBITDA margins of 71.62% against 77.86% reported a year ago. Analysts were expecting the EBITDA margins to be around 73.6%.
During the quarter, the company’s oil production declined by 4% on a YoY basis to 195419 barrels of oil equivalent per day (BOPD). Oil price realisations rose by 6.8% to USD 101 per barrel. Gas production on the other hand was up by 35% to 69 million standard cubic feet of gas per day (MMSCFD). The rise was mainly due to higher production in Krishna Godavari and Cambay Basins. Gas price realisations, however, declined by 8.16% to USD 4.5 per MSCF.
The company has said that it has discovered oil in the 26th field in the Rajasthan block. It has said that the current production is 180000 BOPD in this block and it is on track to meet the year-end target of 200000-215000 BOPD. It has also drilled 3 more wells in the block. Further, the company has made 2 gas discoveries in Sri Lanka. It has also said that it will invest USD 3 billion or Rs 16000 crore in the next 3 years in India to find and produce more oil.
Though the performance has lagged estimates, the exploration programme is well on track. The company is on course to meet its production target for the year and hence it would be a good idea to stay invested in this cash rich business.
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