Earnings Outlook
Increased output to boost Oil India Jul-Sept net profit
This story was originally published at 21:48 IST on 4 November 2024
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By Ayush Kumar
MUMBAI – Upstream crude oil and natural gas explorer and producer Oil India Ltd. is likely to report a strong growth in its net profit for the September quarter on the back of increased oil and gas production and steady gas realisations. However, some analysts expect the net realisation for crude oil would have fallen marginally on a sequential basis due to a fall in crude oil prices.
While the company's net profit for the September quarter will likely jump almost five-fold on year to INR 18.73 billion, its revenue is likely to fall 4.3% to INR 56.59 billion, according to an average of estimates by 10 brokerages. The company's net profit is expected to rise 27.8% sequentially, but the revenue is expected to fall 3.1% sequentially.
Analysts’ estimates for Oil India's Jul-Sept net profit range between INR 15.73 billion and INR 22.20 billion. The lowest is from Antique Stock Broking Ltd. and the highest is from Nomura Equity Research. The estimates for revenue range from INR 53.53 billion to INR 59.77 billion. The lowest is from Elara Securities and the highest from Kotak Institutional Equities.
Oil India is expected to post a volume-driven revenue growth in the latest quarter. The company’s crude oil sales volumes are expected to rise 6.6% on year and 9% sequentially to 895,000 tonnes, Kotak Institutional Equities said. Analysts were divided in their views on the company’s gas volume growth. Kotak Institutional Equities expects the company's natural gas volumes to rise 4% on year and remain flat on quarter, and YES Securities expects the natural gas volumes to grow 4.5% on year and 3.4% sequentially.
Net realisation for oil is expected to fall marginally on quarter to $73.8 per barrel due to lower crude oil prices, Prabhudas Lilladher said, adding that net gas realisation is expected to remain flat on quarter at $6.5 per million British thermal units. However, Anand Rathi expects oil and gas realisations to be flat on quarter.
The company is likely to post earnings before interest, taxes, depreciation, and amortisation of INR 25.96 billion for the quarter, according to an average of estimates by nine brokerages, down from the INR 31.98 billion reported in the same period last year. An 11% on-year growth is expected in the company's EBITDA for the latest quarter, driven mainly by higher crude oil volumes, Kotak Institutional Equities said.
The company's oil production is seen rising 3% sequentially at 870,000 million tonnes and gas production is seen rising 1% at 820 million cubic metres, Prabhudas Lilladher said. Going forward, the company is expected to unlock its growth in gas production from its undeveloped gas reserves, Elara Securities said. The brokerage expects the company to benefit from connection of its gas production infrastructure with GAIL’s pan-India gas grid after the completion of the Guwahati-Barauni pipeline in the second half of the current financial year.
Although there are some headwinds on the realisation front, analysts agree that Oil India is likely to see improvements in production and profitability, supported by modest sales volume. On Monday, shares of Oil India closed at INR 472.30 on the National Stock Exchange, down 0.2%. The company will announce its September quarter earnings Tuesday.
Following are the Jul-Sept earnings estimates for Oil India from 10 brokerages:
|
Brokerage firm |
Net Sales | Net Profit | EBITDA |
| ---------(In INR million)-------------- | |||
| Anand Rathi Share and Stock Brokers Ltd. | 58,900.00 | 19,049.00 | ------ |
| Antique Stock Broking Ltd. | 56,300.00 | 15,730.00 | 25,321.00 |
| Elara Securities (India) Pvt. Ltd. | 53,530.00 | 16,448.00 | 24,666.00 |
| Emkay Global Financial Services Ltd. | 57,674.00 | 19,432.00 | 24,517.00 |
| ICICI Securities Ltd. | 56,000.00 | 16,000.00 | 26,000.00 |
| Kotak Institutional Equities | 59,770.00 | 21,232.00 | 27,673.00 |
| Motilal Oswal Financial Services Ltd. | 55,872.00 | 16,677.00 | 24,409.00 |
| Nomura Equity Research | 54,300.00 | 22,200.00 | 26,500.00 |
| Prabhudas Lilladher Pvt. Ltd. | 57,500.00 | 19,600.00 | 26,600.00 |
| Yes Securities (India) Ltd. | 56,032.00 | 20,976.00 | 27,935.00 |
| Average | 56,587.80 | 18,734.40 | 25,957.89 |
End
Edited by Akul Nishant Akhoury
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