Quarterly Result UpdateCairn India Ltd. Strong performance, Positive triggers to drive future growth Outlook Recommendation (Rs) CMP 346 Current macro- economic situation favours our bullish stance on crude oil, Cairn India post the completion of Rating BUY Cairn Vedanta deal seems the best candidate in the Indian E&P story to benefit from it. With reducing light- heavy spreads and strong petroleum product prices, the realizations for the Cairn crude have jumped and are at Index Details 8.3% discount to the Brent compared to 10-15% previously. In light of current oil embargo, refinery shutdowns Sensex 17,077 across the globe, we expect the spreads to remain at current levels thus benefiting Cairn India. Nifty 5,158 Industry E&P Further, with Bhagyam field commencing production and Aishwarya slated to commence production in H2CY12 , we expect Cairn volumes to spurt up. In addition the company commitment to ramp up production to 2,40,000 Scrip Details bopd by FY13 further enhances the value proposition. However, Cairn has outperformed the Nifty index by 20.4% Mkt Cap (Rs cr) 65,803 in the past 3 months, thus we expect the stock move side-ways in the near term. However, we reaffirm our bullish Eq Shares O/s (Cr) 190 stance on Cairn with a revised price objective of Rs 415. At a CMP of Rs. 346, the stock is trading at a ~19.9% Avg Vol (Lakhs) 2.1 discount to its net asset value at an average Brent oil price of $108 per barrel. 52 Week H/L 372/250 Dividend Yield (%) 0 Key Takeaways Face Value (Rs) 10 Forex gain to the tune of Rs 301.5 crore and lower effective tax rate helped Cairn India (Cairn) post 12.5 % Latest shareholding pattern (%) yoy growth in net profit to Rs.2261.9 crore v/s Rs 2010.1 crore reported in the previous corresponding quarter. The net revenues reported for the quarter post profit petroleum and royalty expense stood flat at Rs Promoters 59 Indian Institutions 6 3096.8 crore on qoq basis but rose significantly by 16.8% on a yoy basis. FII’s 6 Public 8 During the quarter, Mangala Field continued to produce at the current rate of 1,25,000 bopd, with the Total 100 management continuing to pursue higher offtake of 1,50,000 bopd. However, with light- heavy differentials narrowing to $ 3.23 / bbl due to weak Naphtha cracks (- $ 9.9/bbl) and strong fuel oils, the company’s crude Stock performance (%) realisation jumped to $100.3/bbl for RJ crude, a discount of 8.3% to Brent v/s average discount of 10-15% to 1m 3m 6m Brent. Cairn 11.4 21.0 8.3 Nifty 8.8 0.6 -8.9 Bhagyam field commenced production in January 2012. The present reservoir and facilities will help the BSE – Oil 4.4 -5.9 -9.9 company gradual ramp to currently approved plateau rate of 40,000 bopd by March end. The company plans to exit FY12, with RJ field producing at the rate of 1,75,000 bopd. Development work is on progress for the Aishwarya Field with the company expecting to start producing by H2CY12. Management seems to be th Wednesday, 25 Jan, 2012 .
Quarterly Result Update committed to ramp the production from the MBA fields to 2,40,000 bopd by 2013. EOR activities at the MBA field continues to progress at an expected rate with encouraging results. However, with the current pipeline capacity of 175,000 bopd, the company would require further investments or would have to rationalize production. Exploration charge for the quarter was at Rs 176.3 crore, much higher than Rs 38.9 crore reported in previous quarter majorly on account of plugged and abandoned well in Sri Lanka. Resultantly, EBITDA (Excl. OI) for the quarter stood at Rs 2369.2 crore v/s Rs 2541.8 crore, down by 6.8% yoy. However, other income of Rs 112.4 crore and foreign exchange gain on account of depreciating rupee (Rs 53.21) at Rs 301.5 crore helped the company post better profits. Lower interest and effective tax rate further helped uplift profit numbers. Cairn has guided for $1.0 - $1.25 billion for FY13 which would cover majority of investments including investments pertaining to ramp up of production in the MBA field, pipeline capacity expansion, investments in Barmer field, other satellite fields in RJ Block, EOR as well as exploratory activities in other blocks. Cairn India has commenced exploratory activities in 3 blocks in KG D6 Basin. Cairn Lanka has completed the first phase of the exploration campaign in Sri Lanka and are planning to enter the second phase. Net Cash at the end of the quarter stood at Rs 6460.2 crore, slightly lower on the back payment of debentures and other liabilities. th Wednesday, 25 Jan, 2012
Quarterly Result UpdateVentura Securities LimitedCorporate Office: C-112/116, Bldg No. 1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai – 400079This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but noresponsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in theirarticles. Neither Ventura Securities Limited nor any of the contributors accepts any liability arising out of the above information/articles. Reproduction in whole orin part without written permission is prohibited. This report is for private circulation. th Wednesday, 25 Jan, 2012