Cairn India: Q1FY15 Result Analysis
Oil & Gas producer Cairn India reported its financial results for the quarter ended June’14. The income from operations decreased from Rs 2682.89 crore in Mar’14 to Rs 2395.41 crore in June’14. However, it increased from Rs 2133.15 crore in June’13. The total expenses were up significantly from Rs 857.52 crore in June’13 to Rs 1221.85 crore in June’14, up 42%. It was mainly on the back of increase in exploration costs written off which increased to Rs 188.73 crore in June’14 from Rs 21.24 crore in June’13. Furthermore, share of expenses in producing oil & gas blocks increased to Rs 185.14 crore in June’14 from Rs 133.40 crore in June’13 and increase in employee benefit expenses which increased to Rs 40.04 crores in June’14 from Rs 14.49 crores in June’13.
Moreover, the gain from fluctuations in foreign exchange also reduced to Rs 34.27 crore in June’14 from Rs 82.09 crore in June’13. But, it was up significantly given that it reported a loss of Rs 9.49 crore in Mar’14 (QoQ).
The management said that, due to implementation of the new Companies Act they had to change depreciation methods of its assets from “straight line method” to “unit of production method” because of which there was higher depreciation charge for the current quarter. The company has bought back shares worth Rs 1225.45 crore in this quarter.
The net profit of the company decreased significantly to Rs 643.81 crore in June’14 from Rs 1989.12 crore in June’13 (YoY), down 68% and down from Rs 1755.93 crore in Mar’14 (QoQ). This was all mainly due to significant increase in expenses. The EPS decreased from Rs 9.40 per share in Mar’14 to Rs 3.40 per share in June’14 (QoQ) and it stood at Rs 10.41 per share in same quarter last year.
Sudhir Mathur, Interim CEO, Cairn India, said in a statement that “In line with our vision to contribute to the nation’s energy security we are confident of not only achieving stated exploration of 3bn barrels of hydrocarbons in-place, ahead of schedule, but also of adding another 3 bn barrels to our un-risked proposed prospect inventory”.