Cairn India gains after strong Q2 results:24-Oct-2016

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Cairn India gained over 0.5 percent to Rs 233.15 on BSE after consolidated net profit rose 139.16 percent to Rs 778.70 crore on 9.08 percent decline in net sales to Rs 2038.59 crore in Q2 September 2016 over Q2 September 2015.

The result was announced after market hours on Friday, 21 October 2016.

Meanwhile, the BSE Sensex was up 42.38 points, or 0.15 percent, to 28,119.56.

On BSE, so far 1.22 lakh shares were traded in the counter, compared with average daily volume of 4.30 lakh shares in the past one quarter. The stock hit a high of Rs 235.90 and a low of Rs 232.05 so far during the day. The stock hit a 52-week high of Rs 236.90 on 20 October 2016.

The stock hit a 52-week low of Rs 106.60 on 19 January 2016. The stock had outperformed the market over the past 30 days till 21 October 2016, rising 19.08 percent compared with 2.42 percent decline in the Sensex. The scrip had also outperformed the market in past one quarter, rising 20.76 percent as against Sensex’s 0.99 percent rise.

The large-cap company has equity capital of Rs 1875.71 crore. Face value per share is Rs 10.

On a consolidated basis, Cairn India net profit rose 117 percent to Rs 778.70 crore on 8 percent rise in net sales to Rs 2038.59 crore in Q2 September 2016 over Q1 June 2016. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 31 percent to 1039 crore in Q2 September 2016 over Q1 June 2016.

Revenue Q2 September 2016 increased marginally over Q1 June 2016 as discount to Brent for Rajasthan crude declined substantially from $8.2 per bbl to $4.3 per bbl, implying a reduction in discount from 18 percent to 9.3 percent. An improvement in differential between Bonny Light and Brent, and strong refining crack for fuel oil and waxy residue helped reduce the discount, the company said in a statement.

Cairn India’s average price realisation fell 4 percent to $41.80 per barrel of oil equivalent (boe) in Q2 September 2016 compared with $43.70 boe in Q2 September 2015. Average price realisation rose 10 percent compared with $38 boe in Q1 June 2016.

In its outlook, the company said that with an aim to create long term value to the shareholders, it will remain focused on monetizing its Rajasthan resource base. A net capital investment of $100 million is estimated for the year ending March 2017 (FY17), including 20 percent for exploration activities and 80 percent for development of RDG Gas project and completion activities of Mangala EOR. The gross production from Rajasthan for FY17 is expected to be maintained at the year ended March 2016 (FY16) level.

Efforts are ongoing to further improve the economics of key projects – Bhagyam and Aishwariya EOR, Barmer Hill and Satellite Fields, at low oil prices and the pre-development investment is underway to ensure project readiness for the development with grant of extension of PSC. The company retains the flexibility to raise its capital investment as oil prices improve and aims to generate a healthy cash flow post capex so as to retain the ability to pay dividends.

Cairn India is one of the largest independent oil and gas exploration and production companies in India.

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