Cairn India (CAIIND) 117

Result Update Rating matrix Rating : Hold Target : 128 Target Period : 12 months Potential Upside : 9% What s Changed? Target Changed from 173 to 128 EPS FY16E Changed from 11.8 to 8 EPS FY17E Changed from 11.9 to 6.4 Rating Unchanged Quarterly Performance Q3FY16 Q3FY15 YoY (%) Q2FY16 QoQ (%) Revenue 2,039.5 3,504.1 (41.8) 2,242.1 (9.0) EBITDA 666.1 2,026.9 (67.1) 910.7 (26.9) EBITDA (%) 32.7 57.8-2519 bps 40.6-796 bps PAT 8.7 1,349.6 (99.4) 672.7 (98.7) Key Financials Crore FY14 FY15 FY16E FY17E Net Sales 18,761.7 14,646.2 8,802.3 8,566.2 EBITDA 13,666.1 8,522.6 3,354.5 2,989.2 Net Profit 12,431.8 4,479.6 1,506.7 1,202.9 EPS ( ) 65.2 23.9 8.0 6.4 Valuation summary FY14 FY15 FY16E FY17E P/E 1.8 4.9 14.6 18.2 Target P/E 2.0 5.4 15.9 20.0 EV / EBITDA 1.5 2.5 6.8 7.5 P/BV 0.4 0.4 0.4 0.4 RoNW (%) 21.6 7.6 2.5 2.0 RoCE (%) 19.8 10.1 (0.2) 0.2 Stock data Particular Amount Market Capitalization ( Crore) 22,349.8 Total Debt (FY15) ( Crore) (0.0) Cash and Investments (FY15) ( Crore) 16,085.0 EV ( Crore) 6,264.7 52 week H/L 262 / 107 Equity capital ( Crore) 1,874.9 Face value ( ) 10.0 Price performance (%) Return % 1M 3M 6M 12M Cairn India (15.2) (26.8) (32.4) (52.7) ONGC (6.2) (14.7) (24.1) (38.7) Reliance Ind 1.7 5.1 (4.4) 13.6 Oil India (8.0) (21.0) (21.2) (36.8) Research Analyst Mayur Matani mayur.matani@icicisecurities.com Harshal Mehta harshal.mehta@icicisecurities.com Volatile and uncertain times January 27, 2016 Cairn India (CAIIND) 117 Cairn India reported a disappointing set of Q3FY16 numbers. While the topline declined 41.8% YoY to 2039.5 crore, PAT declined 99.4% YoY to 8.7 crore mainly on account of ~43% YoY fall in crude oil prices and higher discount of Rajasthan crude to Brent Cairn India's Rajasthan gross production declined 5.3% YoY to 170444 barrels per day (bpd) below our estimate of 176001 bpd. Gross production declined 7.4% YoY to 202668 bpd against our estimate of 212073 bpd while net production declined 6.1% YoY to 128402 bpd against our estimate of 133214 bpd Capex trimmed down for FY16E In line with its strategy to generate positive cash flows post capex, Cairn India has reduced its planned capex by 40% for FY16E from US$500 million earlier to US$300 million, with majority of the capex allocated to core MBA fields (62%) with focus on Mangala EOR and MBA infill drilling, 15% in growth projects in Barmer Hill, satellite fields and 23% on exploration. On the Raageshwari Gas Terminal (RGT) front, GSPL India has agreed to construct the pipeline connecting RGT to Palanpur via their upcoming Mehsana Bhatinda pipeline under PNGRB approval. Cairn would be announcing its capex guidance for FY17E next quarter. Flat production guidance Cairn has provided flat production guidance from the Rajasthan fields, going ahead. Hence, we expect production from the Rajasthan field at 169056 boepd and 168000 boepd in FY16E and FY17E, respectively. In the current quarter, the polymer injection has been ramped up from 0.2 mbpd to 0.33 mbpd in Mangala field. The impact of this has resulted in the increase of average production at the Mangala EOR to 19 kbopd. On the 20 well infill campaign on the Aishwariya field front, 17 wells have been brought online while the remaining three will be brought online in Q4FY16, resulting in additional volumes from the new infill wells. On the cost front, Rajasthan blended operating cost increased QoQ to $6.9/boe from $6.4/boe due to increase in polymer injection volumes. Vedanta merger, lower oil prices continue to weigh on stock We believe Vedanta s current stock price would make it undesirable for the minority shareholders of Cairn India at the current swap ratio of 1:1, to give a green light to the Cairn-Vedanta merger, announced in Q1FY16. If the merger goes through in the current scenario, it would be negative for Cairn India s shareholders as it would follow the stock price of Vedanta. Due to a sharp fall in oil prices, we have revised our Brent crude oil estimates to $49.1/bbl and $45/bbl for FY16E and FY17E, respectively. The extension of the Rajasthan PSC by the Government of India on current existing terms and reduction in fixed cess on crude oil production would be crucial for Cairn India, going ahead, as it would reduce its costs. However, taking into account the ongoing uncertainties, we estimate Cairn s fair value at 128/share (Rajasthan fields at 68/share) assuming $50/barrel in FY18E. Taking into account 40% discount to cash and cash equivalent, Cairn India is currently trading at an implied Brent crude price of ~US$43.8/barrel. We have a HOLD recommendation on the stock. ICICI Securities Ltd Retail Equity Research

Variance analysis Q3FY16 Q3FY16E Q3FY15 YoY (%) Q2FY16 QoQ (%) Comments Total Revenues 2,039.5 2,087.6 3,504.1-41.8 2,242.1-9.0 Lower than estimated due to lower production YoY and lower Rajasthan crude oil realisation due to higher discount to Brent oil price Operating Expenses 1,227.8 1,223.5 1,189.2 3.2 1,195.1 2.7 Employees Cost 31.6 31.5 32.5-2.6 30.9 2.2 Other Expenses 114.1 136.8 255.6-55.4 105.5 8.2 Total Expenditure 1,373.4 1,391.8 1,477.2-7.0 1,331.5 3.2 EBITDA 666.1 695.8 2,026.9-67.1 910.7-26.9 EBITDA has also declined due to lower crude oil prices EBITDA margins (%) 32.7 33.3 57.8-2519 bps 40.6-796 bps Depreciation 893.0 884.9 890.9 0.2 864.4 3.3 EBIT -227.0-189.0 1,136.0-120.0 46.3-590.2 Interest 4.5 0.0 8.4-47.3 5.8-22.9 Other Income 141.9 350.0 162.9-12.9 120.4 17.9 Continued mark to market losses YoY on bond investments led to lower than estimated other income Extra Ordinary Item 48.8 100.0 353.6 NA 380.7 NA Lower than estimated foreign exchange income during the quarter led to lower than estimated extraordinary items PBT -40.7 261.0 1,644.0-102.5 541.7-107.5 Total Tax -49.4 49.0 294.4-116.8-131.0-62.3 PAT 8.7 212.0 1,349.6-99.4 672.7-98.7 Key Metrics Gross Production (bopd) 202668 212073 218900-7.4 205361-1.3 Net Production (bopd) 128402 133214 136701-6.1 128021 0.3 Lower than estimated Rajasthan production mainly led to lower production Rajasthan Prodtn.. (bopd) 170444 176001 180010-5.3 168126 1.4 Change in estimates FY16E FY17E ( Crore) Old New % Change Old New % Change Comments Revenue 9,588.2 8,802.3-8.2 10,557.6 8,566.2-18.9 Reduced revenue estimates due to a decline in crude oil price estimates EBITDA 4,066.5 3,354.5-17.5 4,784.5 2,989.2-37.5 Reduced estimates on account of lower crude oil prices as well as lower production EBITDA Margin (%) 42.4 38.1-430 bps 45.3 34.9-1042 bps PAT 2,210.0 1,506.7-31.8 2,231.0 1,202.9-46.1 EPS ( ) 11.8 8.0-31.8 11.9 6.4-46.1 Assumptions Current Earlier FY14 FY15 FY16E FY17E FY16E FY17E Comments Gross Production (bopd) 218,593 211,671 205,498 202,716 210,007 209,942 Net Production (bopd) 137,094 132,664 128,987 128,619 131,503 Reduced estimates due to a natural decline in offshore assets and flat production 132,898 at Rajasthan assets Rajasthan Prodtn.. (bopd) 181,483 175,144 170,430 171,167 173,548 176,666 Realisation ($/bbl) 94.3 77.2 44.2 39.1 47.6 49.6 Brent Prices ($/bbl) 107.5 85.6 49.1 45.0 52.8 Reduced Brent crude oil assumption due to global crude oversupply and slowerthan-expected pick-up in demand 55.0 US$/ 60.5 61.0 64.6 67.0 64.6 65.0 ICICI Securities Ltd Retail Equity Research Page 2

Company Analysis Flat production guidance Cairn has provided flat production guidance from Rajasthan fields, going ahead. Hence, we expect production from the Rajasthan field at 169056 boepd, 168000 boepd in FY16E, FY17E, respectively. In the current quarter, the polymer injection has been ramped up from 0.2 mbpd to 0.33 mbpd in Mangala field. The impact of this has resulted in an increase of average production at the Mangala EOR to 19 kbopd. On the 20 well infill campaign in the Aishwariya field front, 17 wells have been brought online while the remaining three will be brought online in Q4FY16, resulting in additional volumes from new infill wells. The tendering of rigs, drilling and completion of long term lead items is ongoing at Bhagyam EOR project for increasing existing production and seeking discussion and alignment with JV for Aishwariya Barmer hill FDP approval, thus remaining as potential incremental contributor to production. On the cost front, Rajasthan blended operating cost increased QoQ to $6.9/boe from $6.4/boe due to increase in polymer injection volumes. Exhibit 1: Gross oil & gas production from Rajasthan fields (boepd) 220000 200000 180000 183164 163262 180010 174206 175144 172224 168126 170444 170430 171167 boepd 160000 140000 120000 100000 Q1FY15 Q2FY15 Q3FY15 Q4FY15 FY15E Q1FY16 Q2FY16 Q3FY16 FY16E FY17E The company plans to double its gas production from RDG through the existing pipeline by installing additional compressors. It has significant potential of 1-3 tscf of GIIP with an estimated recovery rate of 50%. The growth in production in existing fields will be achieved through the EOR programme in MBA field, further development of Barmer Hill and development of Raageshwari field. We expect production from the Rajasthan field at 169056 boepd and 168000 boepd in FY16E and FY17E, respectively. ICICI Securities Ltd Retail Equity Research Page 3

Exhibit 2: Net crude oil & gas production (boepd) trend 150000 140000 130000 137907 123178 136701 132929 132664 130565 128021 128402 128987 128619 120000 110000 100000 Q1FY15 Q2FY15 Q3FY15 Q4FY15 FY15E Q1FY16 Q2FY16 Q3FY16 FY16E FY17E boepd Capex trimmed down for FY16 In line with its strategy to generate positive cash flows post capex, Cairn India has reduced its planned capex by 40% for FY16E from US$500 million earlier to US$300 million, with majority of capex allocated to core MBA fields (62%) with focus on Mangala EOR and MBA infill drilling, 15% in growth projects in Barmer Hill, satellite fields and 23% on exploration. On the Raageshwari Gas Terminal (RGT) front, GSPL India has agreed to construct the pipeline connecting RGT to Palanpur via their upcoming Mehsana Bhatinda pipeline under PNGRB approval. The company would be announcing its capex guidance for FY17E, next quarter. Exhibit 3: Capex strategy FY15E FY16E Segment Value (mn $) % Allocation Value (mn $) % Allocation Core Fields 550 50 225 45 Growth Projects 220 20 200 40 Exploration 330 30 75 15 Total 1100 100 500 100 ICICI Securities Ltd Retail Equity Research Page 4

Other highlights Loaded first cargo of RJ crude for MRPL from Bhogat terminal Ramp up of polymer injection at Mangala EOR from 200000 barrels per day to 330000 barrels per day, leading to increase in the average production at 19000 boepd for Q3FY16. The tendering of rigs, drilling and completion of long term lead items is ongoing at Bhagyam EOR project for increasing the existing production FEED in advance stage Out of the remaining 18 drilled infills, five more have been bought online at Aishwariya Cairn India has reduced its planned capex by 40% for FY16E from US$500 million earlier to US$300 million The discount to Brent for Rajasthan crude widened to ~21.1% from 14.3% on a sequential basis due to lower demand for heavy crude Total 15 well hydro-frac campaign has been started at RDG field. Five well hydro-frac campaign had been completed at RDG field in the previous quarter Most of the interest areas have been covered with the 3D seismic programme in Rajasthan block On the Raageshwari Gas Terminal front, GSPL India has agreed to construct the pipeline connecting RGT to Palanpur via their upcoming Mehsana Bhatinda pipeline under PNGRB approval. The tendering process is under way for the new gas processing terminal The tendering of rigs, drilling and completion of long term lead items is ongoing at Bhagyam EOR project for increasing the existing production and seeking discussions and alignment with JV for Aishwariya Barmer hill FDP approval Exploration activity to be reduced from current levels of 70 crore Flat FY17 production guidance Key highlights of proposed merger between Cairn and Vedanta Cairn India s minority shareholders will receive for each equity share held: o One equity share in Vedanta Ltd o One 7.5% redeemable preference share in Vedanta Ltd with a face value of 10 each Implies a premium of 7.3% to Cairn India s previous closing price Vedanta Ltd shareholders will hold 29.7% and Cairn India shareholders 20.2% of the merged entity Vedanta plc pro-forma ownership of 50.1% in Vedanta Ltd Effected by way of a scheme of arrangement Conditional on shareholder approval at each of Vedanta plc, Vedanta Ltd and Cairn India, as well as regulatory approvals Transaction governance in line with India, UK regulations and best practices Expected to close in the first quarter of CY16 ICICI Securities Ltd Retail Equity Research Page 5

Sensitivity to change in Brent crude prices Our target price will change by ~ 7/share for every $5/barrel change in crude oil price. We have assumed an exchange rate of 66 per US dollar and Brent crude price of $50/barrel in perpetuity. Exhibit 4: Sensitivity of target price to exchange rate & crude oil prices Exchange Rate ( /US$) Source: ICICIdirect.com Research Brent Crude Oil Prices (US$/barrel) 25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0 65.0 54.0 83 90 97 104 110 117 123 130 136 56.0 83 91 98 105 112 119 125 132 138 58.0 84 92 99 106 114 120 127 134 141 60.0 85 93 100 108 115 122 129 137 144 62.0 85 94 101 109 117 124 131 139 146 64.0 86 94 102 110 118 126 133 141 149 66.0 87 95 103 112 120 128 135 143 151 68.0 87 96 105 113 121 129 138 145 154 70.0 88 97 106 114 123 131 139 148 156 ICICI Securities Ltd Retail Equity Research Page 6

Outlook and valuation We believe Vedanta s current stock price would make it undesirable for the minority shareholders of Cairn India, at the current swap ratio of 1:1, to give a green light to the Cairn-Vedanta merger, announced in Q1FY16. If the merger goes through in the current scenario, it would be negative for Cairn India s shareholders as it would follow the stock price of Vedanta. Due to a sharp fall in oil prices, we have revised our Brent crude oil estimates to $49.1/bbl and $45/bbl for FY16E and FY17E, respectively. The extension of the Rajasthan PSC by the Government of India on current existing terms and reduction in fixed cess on crude oil production would be crucial for Cairn India, going ahead, as it would reduce its costs. However, taking into account the ongoing uncertainties, we estimate Cairn s fair value at 128/share (Rajasthan fields at 68/share) assuming $50/barrel FY18E. Taking into account the 40% discount to cash and cash equivalent, Cairn India is currently trading at an implied Brent crude price of ~US$43.8/barrel. We have a HOLD recommendation on the stock. Exhibit 5: Valuation Crore (share) Rajasthan fields 12,828.1 68 Ravva 803.6 4 Cambay 642.2 3 Total 17106.7 76 Less: Net Debt (40% discount to cash and cash equivalent) -9,651.0-51 Equity Value 26757.7 128 Exhibit 6: Valuation 180 per share 120 60 68 4 3 51 128 0 Rajasthan fields Ravva Cambay Cash and Liquid Investments Total Source: ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7

Company snapshot 500 450 400 350 300 250 200 150 Target Price: 128 100 50 0 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Dec-08 Slowdown in the global economy and Lehman crisis trigger a sharp fall in crude prices leading to a decline in stock price Jun-09 Cairn may delay production from Rajasthan fields due to tax concerns (VAT of 4% may imply from oil production from Rajasthan fields) Aug-09 Cairn starts production from Mangala field of the Rajasthan block Jan-10 Management guides that oil production in the MBA fields would lag the capacity build-up in these fields. Hence, ramp-up in the production would take longer than earlier estimated Aug-10 Cairn Energy Plc announces plans to sell a maximum of 51% of its shareholding in Cairn India to Vedanta Resources. Open offer at 355 Jul-11 Government approves Cairn-Vedanta deal subject to new buyer (Vedanta) agreeing to pay increased cess and royalty on complete production from Rajasthan fields Apr-12 Rajasthan revises its recoverable risked prospective resource that has increased from 250 mmboe to 530 mmboe and also peak gross production level in Rajasthan from 240,000 bopd to 300,000 bopd Jan-13 The production ramp up from Rajasthan MBA fields happens at a slower pace, thereby reducing production estimates for the year Nov-13 Cairn India announces a proposal for buyback from the open market at a price not exceeding 335/share, with an indicative maximum shares of 17.1 crore with the quantum of the buyback not exceeding 5725 crore Jul-14 Cairn India gives $800 million loan for two years to Vedanta group out of the total commitment of $1.25 billion at the rate of Libor + 300 bps Jun-15 The Vedanta Group announces a merger between its flagship Indian firm Vedanta Ltd and its oil subsidiary Cairn India. Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Vedanta Resources PLC 30/Sep/15 0.6 1122.7 0.0 2 Cairn UK Holdings, Ltd. 30/Sep/15 0.1 184.1 0.0 3 Life Insurance Corporation of India 30/Sep/15 0.1 169.8 0.0 4 Dimensional Fund Advisors, L.P. 31/Oct/15 0.0 14.0 0.0 6 BlackRock Institutional Trust Company, N.A. 31/Dec/15 0.0 10.6-0.4 7 Eastspring Investments (Singapore) Limited 30-Sep-15 0.0 9.9-0.6 8 HSBC Global Asset Management (Hong Kong) Limited 31/Aug/15 0.0 9.5 0.0 9 Mondrian Investment Partners Ltd. 30-Nov-15 0.0 6.4-0.2 10 Templeton Asset Management Ltd. 30/Sep/15 0.0 6.4 0.5 Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Promoter 59.9 59.9 59.9 59.9 59.9 FII 15.3 14.3 13.5 13.1 13.1 DII 9.8 10.4 10.5 10.4 10.4 Others 15.0 15.5 16.2 16.7 16.7 Recent Activity Investor name Investor name Investor name Value (m) Shares Investor name Value (m) Shares Thompson, Siegel & Walmsley LLC 3.51 1.50 Unigestion -13.95-4.89 Neuberger Berman, LLC 1.51 0.73 ICICI Prudential Asset Management Co. Ltd. -3.28-1.62 Templeton Asset Management Ltd. 1.11 0.47 SEB Investment Management AB -2.70-1.16 HDFC Asset Management Co., Ltd. 0.92 0.45 Schroder Investment Management Ltd. (SIM) -2.21-0.94 Reliance Capital Asset Management Ltd. 0.61 0.30 LGT Capital Partners Ltd. -1.96-0.69 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 8

Financial summary Profit and loss statement Crore (Year-end March) FY14 FY15 FY16E FY17E Revenue 18,761.7 14,646.2 8,802.3 8,566.2 Growth (%) 7.1-21.9-39.9-2.7 Operating expense 4058.6 4565.5 4779.3 4888.9 Employee Cost 274.1 110.5 127.1 132.9 Administration Cost 350.6 349.5 243.3 305.3 Exploration Cost 412.4 1098.0 298.2 250.0 Total Expenditure 5095.7 6123.6 5447.8 5577.0 EBITDA 13,666.1 8,522.6 3,354.5 2,989.2 Growth (%) 4.9-37.6-60.6-10.9 Depreciation 2297.4 2569.5 3448.3 2874.1 EBIT 11368.7 5953.2-93.8 115.1 Interest 41.5 20.4 11.8 0.0 Other Income 783.4 1284.9 969.0 1300.0 PBT 12849.6 5609.5 1474.7 1415.1 Growth (%) 4.1-56.3-73.7-4.0 Tax 417.8 1129.9-32.0 212.3 Reported PAT 12,431.8 4,479.6 1,506.7 1,202.9 Growth (%) 3.1-64.0-66.4-20.2 EPS 65.2 23.9 8.0 6.4 Cash flow statement Crore (Year-end March) FY14 FY15 FY16E FY17E Profit after Tax 12,431.8 4,479.6 1,506.7 1,202.9 Less: Dividend Paid 2,909.0 1,974.2 877.4 877.4 Add: Depreciation 2,297.4 2,569.5 3,448.3 2,874.1 Add: Others 271.5 536.2 300.0 300.0 Cash Profit 12,091.6 5,611.1 4,377.6 3,499.5 Increase/(Decrease) in CL 1,630.6-825.2-4,122.7 171.3 (Increase)/Decrease in CA -2,890.3-9,364.3 2,202.0 531.0 CF from Operating Activities 10831.9-4578.4 2456.9 4201.9 Purchase of Fixed Assets 4,095.1 1,336.6 3,521.8 3,570.0 (Inc)/Dec in Investments -10,747.3 6,077.7 750.0-500.0 Others 0.0 0.0 0.0 1.0 CF from Investing Activities -14,842.4 4,741.1-2,771.8-4,070.0 Inc/(Dec) in Loan Funds 0.0 0.0 0.0 0.0 Inc/(Dec) in Sh. Cap. & Res. 215.3-1,072.9-265.8 0.0 Others 0.0 0.0 0.0 1.0 CF from financing activities 215.3-1,072.9-265.8 0.0 Change in cash Eq. -3,795.1-910.3-580.8 131.9 Op. Cash and cash Eq. 5,557.0 1,761.9 851.6 270.8 Cl. Cash and cash Eq. 1,761.9 851.6 270.8 402.7 Balance sheet Crore (Year-end March) FY14 FY15 FY16E FY17E Source of Funds Equity Capital 1,907.6 1,874.9 1,874.9 1,874.9 Stock Options 0.0 0.0 0.0 0.0 Reserves & Surplus 55,530.1 56,995.3 57,358.8 57,684.3 Shareholder's Fund 57,437.7 58,870.2 59,233.7 59,559.1 Loan Funds 0.0 0.0 0.0 0.0 Deferred Tax Liability 735.6 1,271.8 1,571.8 1,871.8 Minority Interest 0.0 0.0 0.0 0.0 Source of Funds 58,173.2 60,142.0 60,805.4 61,430.9 Application of Funds Gross Block 24,462.3 28,059.9 28,909.9 29,759.9 Less: Acc. Depreciation 3,250.9 6,960.3 8,362.9 9,856.1 Net Block 21,211.5 21,099.6 20,546.9 19,903.8 Producing Properties 3,864.4 2,533.6 1,958.0 2,047.1 Capital WIP 5,696.9 5,906.7 7,108.5 8,358.5 Investments 21,311.1 15,233.4 14,483.4 14,983.4 Inventories 297.1 343.9 192.9 187.8 Debtor 2,512.4 1,125.0 964.6 938.8 Cash 1,761.9 851.6 270.8 402.7 Loan & Advance, Other CA 9,035.6 19,740.5 17,849.8 17,349.8 Total Current assets 13,606.9 22,061.0 19,278.2 18,879.0 Current Liabilities 2,716.6 4,018.0 1,808.7 1,760.2 Provisions 4,800.9 2,674.3 760.9 980.7 Total CL and Provisions 7,517.5 6,692.3 2,569.6 2,740.9 Net Working Capital 6,089.4 15,368.7 16,708.6 16,138.1 Miscellaneous expense 0.0 0.0 0.0 0.0 Application of Funds 58,173.2 60,142.0 60,805.4 61,430.9 Key ratios (Year-end March) FY14 FY15 FY16E FY17E Per share data ( ) Book Value 301.1 314.0 315.9 317.7 Cash per share 95.0 85.8 73.4 76.7 EPS 65.2 23.9 8.0 6.4 Cash EPS 77.2 37.6 26.4 21.7 DPS 13.0 9.0 4.0 4.0 Profitability & Operating Ratios EBITDA Margin (%) 72.8 58.2 38.1 34.9 PAT Margin (%) 66.3 30.6 17.1 14.0 Fixed Asset Turnover (x) 0.6 0.5 0.3 0.3 Inventory Turnover (Days) 5.8 8.6 8.0 8.0 Debtor (Days) 48.9 28.0 40.0 40.0 Current Liabilities (Days) 52.8 100.1 75.0 75.0 Return Ratios (%) RoE 21.6 7.6 2.5 2.0 RoCE 19.8 10.1-0.2 0.2 RoIC 33.1 13.9-0.2 0.3 Valuation Ratios (x) PE 1.8 4.9 14.6 18.2 Price to Book Value 0.4 0.4 0.4 0.4 EV/EBITDA 1.5 2.5 6.8 7.5 EV/Sales 1.1 1.4 2.6 2.6 Leverage & Solvency Ratios Debt to equity (x) 0.0 0.0 0.0 0.0 Interest Coverage (x) NA NA NA NA Debt to EBITDA (x) 0.0 0.0 0.0 0.0 Current Ratio 1.8 3.3 7.5 6.9 Quick ratio 1.8 3.2 7.4 6.8. ICICI Securities Ltd Retail Equity Research Page 9

ICICIdirect.com coverage universe (Oil & Gas) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E Aban Offshore (ABALLO) 185 223 Hold 1,068 88.7 73.1 85.9 2.1 2.5 2.2 6.3 6.0 5.5 9.0 8.2 8.4 9.5 7.3 7.9 Cairn India (CAIIND) 117 128 Hold 22,191 23.9 8.0 6.4 4.9 14.6 18.2 2.5 6.8 7.5 10.1-0.2 0.2 7.6 2.5 2.0 GAIL (India) (GAIL) 355 355 Buy 45,031 24.0 13.0 18.6 14.8 27.3 19.1 11.4 14.8 11.4 9.6 6.0 8.0 10.4 5.5 7.5 Gujarat Gas (GUJGAS) 564 520 Hold 7,765 32.2 16.3 33.5 17.5 34.7 16.8 9.7 13.2 9.0 16.6 10.8 17.1 22.3 10.5 18.3 Gulf Oil Lubricants (GULO) 500 519 Hold 2,479 15.6 18.9 20.9 32.0 26.4 24.0 19.4 16.3 15.1 30.9 33.5 33.1 41.4 38.6 34.1 Hindustan Petroleum (HINPET) 782 820 Hold 26,511 80.6 67.7 74.5 9.7 11.6 10.5 8.3 8.3 6.9 10.2 7.9 9.4 17.1 13.3 13.4 Indian Oil Corporation (INDOIL) 391 405 Hold 94,933 21.7 34.9 33.4 18.0 11.2 11.7 9.4 5.4 5.1 4.6 9.7 9.3 7.8 11.5 10.2 Indraprastha Gas (INDGAS) 582 547 Buy 8,148 31.3 31.4 36.0 18.6 18.6 16.2 10.2 9.5 8.3 28.7 26.7 25.5 20.9 18.1 17.9 Mangalore Refinery (MRPL) 65 61 Buy 11,392-9.8-1.4 7.5-6.7-45.4 8.6-4.9 30.1 6.1-17.9 0.3 16.8-32.3-5.2 22.5 Oil India Limited (OILIND) 344 430 Buy 20,679 41.7 43.1 39.7 8.2 8.0 8.7 5.0 4.1 4.1 9.4 10.1 9.4 11.7 11.4 10.1 ONGC (ONGC) 218 250 Hold 186,511 21.4 19.4 22.2 10.2 11.2 9.8 3.9 4.4 4.1 10.5 9.5 10.3 9.8 8.9 9.9 Petronet LNG (PETLNG) 252 225 Buy 18,900 11.8 13.1 15.8 21.4 19.3 16.0 14.7 12.3 9.9 13.5 15.6 17.8 15.5 15.4 16.1 ICICI Securities Ltd Retail Equity Research Page 10

RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai 400 093 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 11

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