Earnings Outlook
Flat sales volume to dent Oil India's Oct-Dec profit
This story was originally published at 13:11 IST on 5 February 2025
Register to read our real-time news.Informist, Wednesday, Feb. 5, 2025
By Akshay V. Johnson
MUMBAI – Oil India Ltd. is likely to report an on-year and on-quarter fall in net profit for the December quarter, primarily due to flat sales volume. The company's realisations have been impacted by lower crude oil prices. If the results align with projections, the December quarter will be the fourth quarter in the last six when the company has registered an on-year decline in net profit.
The company's net profit is seen falling 2.5% on year to INR 15.44 billion in Oct-Dec, according to an average of estimates from 11 brokerages. The forecasts for net profit range from INR 14.05 billion by Motilal Oswal Financial Services to INR 18.70 billion by Nomura Equity Research.
Oil India is projected to report a revenue of INR 53.39 billion for the December quarter, flat from the previous year, according to the average estimates from 11 brokerage firms. Among these estimates, Kotak Institutional Equities has the highest estimate of INR 54.44 billion while Anand Rathi Share and Stock Brokers has the lowest of INR 51.68 billion. Sequentially, the company's net profit is likely to decline by 16%, although revenue is expected to rise by 2%.
Though Oil India saw a fivefold increase in net profit for the September quarter, the surge was mainly due to an exceptional expense of INR 23.67 billion related to the Goods and Services Tax on royalty payments for crude oil and natural gas.
The company's crude oil production is likely to grow 1% on year while gas output is set to be flat because of a delay of a few quarters in the Indradhanush Gas Grid pipeline connection and constraints in demand from the Northeast, Elara Securities said. Oil India would likely benefit from the proposed connection of its gas production infrastructure with Gas Authority of India Ltd.'s pan-India gas grid. The Indradhanush Gas Grid in the Northeast will connect the company's major fields by the June quarter unlocking its further growth potential for gas production, the brokerage added.
The company's oil sales are expected to remain flat on year while gas sales are anticipated to fall 4% on year, according to Motilal Oswal. The brokerage sees rise in production of the Baghjan field as a key monitorable in the medium term.
Oil India's earnings before interest, tax, depreciation, and amortisation for the December quarter is seen at INR 23.37 billion, according to an average of estimates from nine brokerages. In the September quarter, the company reported a net profit of INR 18.34 billion on revenue of INR 55.19 billion.
The company's EBITDA is expected to rise 10% sequentially to INR 24 billion, led by higher volumes and a moderation in operating expenses, Nomura said. The brokerage expects the company's oil realisations to remain steady at $73.8 per barrel from the previous quarter and gas realisations at $6.5 per barrel.
Oil India will announce its Oct-Dec earnings on Friday. Of the nine brokerage reports of the company available with Informist, eight have a 'buy' or equivalent rating and one has a 'hold' rating. At 1306 IST, its shares were at INR 427.75 on the National Stock Exchange, up 5.5% from the previous close. The stock has fallen 11% from its closing price of Nov. 6, a day after the company had released its results for the September quarter.
Following are the Oct-Dec earnings estimates for Oil India based on reports compiled by Informist from 11 brokerages in descending order of the estimate of net profit:
Brokerage | Net sales (In INR million) | Net profit (In INR million) | EBITDA (In INR million) |
Nomura Equity Research | 53,400.00 | 18,700.00 | 24,100.00 |
JM Financial Institutional Securities Pvt. Ltd. | 52,781.00 | 17,160.00 | 24,291.00 |
ICICI Securities Ltd. | 53,900.00 | 16,200.00 | 25,900.00 |
Kotak Institutional Equities | 54,440.00 | 15,814.00 | 25,184.00 |
Emkay Global Financial Services Ltd. | 54,034.00 | 15,115.00 | 22,545.00 |
Anand Rathi Share and Stock Brokers Ltd. | 51,682.00 | 15,051.00 | ---- |
Elara Securities (India) Pvt. Ltd. | 53,045.00 | 14,606.00 | 20,514.00 |
Prabhudas Lilladher Pvt. Ltd. | 53,400.00 | 14,600.00 | 20,500.00 |
YES Securities (India) Ltd. | 53,828.00 | 14,506.00 | 25,304.00 |
Sharekhan Ltd. | 53,370.00 | 14,050.00 | ---- |
Motilal Oswal Financial Services Ltd. | 53,370.00 | 14,045.00 | 21,997.00 |
Average | 53,386.36 | 15,440.64 | 23,370.56 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Subhojit Sarkar
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