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Oil India Ltd: A weak quarter - Views on News from Equitymaster
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Oil India Ltd: A weak quarter
Jan 24, 2017

Oil India Limited announced results for the quarter ended September 2016. The company has reported an 6.5% and 7.8% Year on Year (YoY) decline in sales and net profit respectively during the quarter. Here is a brief summary of the results.

Performance summary
  • Revenues for the quarter declined 6.5% YoY over the corresponding quarter last year. Overall, the sales volumes grew 3.7% YoY during the quarter.
  • Revenues from crude oil declined 1.5% YoY while net realization on crude were down 4.0% YoY, on account of decline in the crude price. Crude oil sales volumes were almost flat YoY.
  • Gas sales volumes for the quarter grew 8.7 % YoY. In rupee terms, the per unit realization declined 1.1% YoY.
  • Operating profit for the quarter declined 4.8% YoY during the quarter, while margin improved to 33.3%, from 32.8% in the corresponding quarter last year. Operating margin on crude oil stood at 30.6% versus 31.1% in 2QFY16. However, for natural gas, operating profit margin declined substantially to 37.9%, from 55.5% in 2QFY16.
  • No discount has been offered by the company so far in this fiscal year. For 2QFY16 and 1HFY16, the discount stood at Rs 845 m and Rs 2.5 bn respectively. Despite that, the bottom-line and the net profit margins for the quarter and half year ended September 2016 have declined on a year on year basis.
  • The company has issued bonus shares in the ratio of one equity share of Rs 10 each for three existing shares (of Rs 10 each).

    Standalone Financial Summary
      2QFY16 2QFY17 YoY Change (%) 1HFY16 1HFY17 YoY Change (%)
    Net Sales 23,977 22,427 -6.5% 51,478 43,760 -15.0%
    Other operating income 1,338 887 -33.7% 2,663 1,765 -33.7%
    Expenditure 16,120 14,949 -7.3% 32,733 28,532 -12.8%
    Operating profit (EBDITA) 7,857 7,478 -4.8% 18,745 15,228 -18.8%
    EBDITA margin (%) 32.8% 33.3% 36.4% 34.8% -4.4%
    Other income 4,294 3,895 -9.3% 7,108 6,292 -11.5%
    Interest (net) 968 989 2.2% 1,887 1,980 4.9%
    Depreciation 2,154 2,521 17.1% 3,998 4,810 20.3%
    Exceptional items 0 0 0 0 -
    Profit before tax 10,367 8,750 -15.6% 22,632 16,496 -27.1%
    Pretax margin (%) 43.2% 39.0% 44.0% 37.7%
    Tax 3,310 2,947 -11.0% 8,143 5,749 -29.4%
    Effective tax rate (%) 31.9% 33.7% 36.0% 34.9%
    Profit after tax/(loss) 7,057 5,802 -17.8% 14,489 10,747 -25.8%
    Net profit margin (%) 29.4% 25.9% 28.1% 24.6% -12.7%
    No. of shares (m) 802
    Diluted earnings per share (Rs)* 24.4
    Price to earnings ratio (x)* 13.8

    Cost Breakup
    (Rs m) 2QFY16 2QFY17 YoY ch.(%) 1HFY16 1HFY17 YoY ch.(%)
    Change in inventory 52 38 -27.3% 194 -195 na
    as a % of sales 0.2% 0.2% 0.4% -0.4%
    Employee expense 4,270 3,662 -14.2% 8,338 7,214 -13.5%
    as a % of sales 17.8% 16.3% 16.2% 16.5%
    Royalty & Cess 6,923 6,000 -13.3% 14,648 11,697 -20.1%
    as a % of sales 28.9% 26.8% 28.5% 26.7%
    Contract cost 2,363 1,933 -18.2% 4,226 4,267 1.0%
    as a % of sales 9.9% 8.6% 8.2% 9.8%
    Other expense 2,512 3,317 32.0% 5,327 5,550 4.2%
    as a % of sales 10.5% 14.8% 10.3% 12.7%
    Total expense 16,120 14,949 -7.3% 32,733 28,532 -12.8%
    as a % of sales 67.2% 66.7% 63.6% 65.2%
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