MOSL: OIL INDIA (Buy)-EBITDA growth (albeit in-line) restricted by higher other expenditure

Oil India: EBITDA growth (albeit in-line) restricted by higher other expenditure

(OINL IN, Mkt Cap USD3.1b, CMP INR199, TP INR263, 32% Upside, Buy)

• Revenue increased 51% YoY (+10% QoQ) to INR37.4b, marginally ahead of our estimate of INR35.7b, led by better-than-expected crude oil production and sales. Crude oil sales/production ratio stood at 97% (our estimate: 98%), while realization came in at USD73.4/bbl (our estimate: USD73.7; +47% YoY, +2% QoQ). EBITDA growth was restricted to 46% YoY (+5% QoQ) (at INR14.7b – in line with our estimate of INR14.7b) due to higher other expenditure of USD9.4/boe (our estimate: USD6.8; 2QFY18: USD4.6; 1QFY19: USD8.8). Other expenditure inched up due to (a) provisions of ~INR1.2b (2QFY18: INR15.1m) and (b) insurance, rent and sundry expenditure of INR2.71b (2QFY18: INR73.8m). PAT of INR8.6b (+33% YoY, +23% QoQ) came in below our estimate of INR9.7b due to lower other income of INR2.9b (our estimate: INR4b; -13% YoY, +127% QoQ).
• Gross realization was impacted by rising crude oil prices. Production of crude oil stood at 0.86mmt (flat YoY, +1% QoQ) and of gas at 0.7bcm (-9% YoY, +4% QoQ). Total production declined 4% YoY (+3% QoQ) to 1.55mmtoe. Sales of oil stood at 0.83mmt (-1% YoY, +2% QoQ) and of gas at 0.65bcm (+2% YoY, +8% QoQ). Total sales were flat YoY (+5% QoQ) at 1.48mmtoe.