Cairn India (CAIIND) 274

Result Update Rating matrix Rating : Hold Target : 270 Target Period : 12 months Potential Upside : -1% What s Changed? Target Changed from 245 to 270 EPS FY17E Changed from 12.7 to 13.3 EPS FY18E Changed from 12.4 to 15.7 Rating Unchanged Quarterly Performance Q3FY17 Q3FY16 YoY (%) Q2FY17 QoQ (%) Revenue 2,149.4 2,039.5 5.4 2,038.6 5.4 EBITDA 1,083.7 666.1 62.7 1,039.1 4.3 EBITDA (%) 50.4 32.7 1776 bps 51.0-55 bps PAT 603.7 8.7 NA 778.7 NA Key Financials Crore FY15 FY16 FY17E FY18E Net Sales 14,646.2 8,625.6 8,517.5 10,126.8 EBITDA 8,522.6 3,364.9 4,292.3 5,647.4 Net Profit 4,479.6 (9,431.9) 2,490.1 2,950.7 EPS ( ) 23.9 (50.3) 13.3 15.7 Valuation summary FY15 FY16 FY17E FY18E P/E 11.5 (5.4) 20.6 17.4 Target P/E 11.3 (5.4) 20.3 17.2 EV / EBITDA 5.9 14.6 10.9 7.5 P/BV 0.9 1.1 1.0 1.0 RoNW (%) 7.6 (19.3) 4.9 5.6 RoCE (%) 10.1 0.5 2.3 4.4 Stock data Particular Amount Market Capitalization ( Crore) 52,340.6 Total Debt (FY16) ( Crore) (0.0) Cash and Investments (FY16) ( Crore) 17,439.5 EV ( Crore) 34,901.1 52 week H/L 283 / 111 Equity capital ( Crore) 1,874.9 Face value ( ) 10.0 Price performance (%) Return % 1M 3M 6M 12M Cairn India 6.9 13.1 41.4 119.5 ONGC (2.6) 7.2 26.4 32.6 Reliance Ind (4.2) 2.8 0.2 7.9 Oil India (4.0) 13.8 23.6 35.4 Research Analyst Mayur Matani mayur.matani@icicisecurities.com Akshay Gavankar akshay.gavankar@icicisecurities.com Beneficiary of rise in oil prices February 10, 2017 Cairn India (CAIIND) 274 Cairn India reported its Q3FY17 results, which were below our estimates on the profitability front. Revenues increased 5.4% QoQ to 2194.4 crore (I-direct estimate: 2038.6 crore) due to increase in the Rajasthan crude oil realisation QoQ (lower discount of $3.4/bbl against $4.3/bbl to Brent prices) while PAT declined 22.5% QoQ to 603.7 crore in Q3FY17 (I-direct estimate: 667.4 crore) due to increase in operational expenses Cairn India's Rajasthan gross production declined 8% QoQ at 154272 barrels per day (bpd) largely in line with our estimate of 154272 bpd. Gross production also declined 7.4% to 181819 bpd vs. our estimate of 181038 bpd and net production declined 7.8% QoQ to 115829 bpd vs. our estimate of 115117 bpd. The decline in production was mainly on account of maintenance shutdown in at Rajasthan fields Production performance in line with estimates In terms of production, Cairn India s Q3FY17 gross production numbers came in largely in line QoQ with our estimates and reported a decline of 7.4% QoQ at 181819 boepd due to maintenance shutdown at MPT in Rajasthan fields. Rajasthan gross production declined 8% QoQ to 154272 bpd vs. our estimate of 153001 bpd. While polymer injection at Mangala EOR has led to additional production of 3 kboepd in Q3FY17, Ravva and Cambay block continued to show natural decline in the well (lower 4% and 5% QoQ respectively). For Aishwariya EOR, Barmer EOR, polymer injection is planned to begin in H1CY18, Q1CY19 respectively. Cairn India, through its various initiatives such as EOR, reservoir management has continued to optimise the production from naturally declining wells. Hence, we expect production from Rajasthan field at 163277 boepd and 169831 boepd in FY17E and FY18E, respectively. Rise in operational costs due to maintenance shutdown The waterflood and blended operating cost at Rajasthan increased to $4.3/boe and $6.3/boe, respectively, in Q3FY17 against $3.9/boe and $5.8/boe, respectively, in Q2FY17. However, the polymer injection was maintained at 0.4 mbpd. Operating costs are expected to normalise in Q4FY17. The company focus remains optimistic with respect to cash flows especially in the current scenario as well. Vedanta stock price to continue to influence Cairn India s price The revised Cairn-Vedanta merger deal has been approved by the respective shareholders of Cairn India and Vedanta Ltd and is stated to be effective by end of Q4FY17, post approval of jurisdictional high courts and other regulatory entities. The approved proposal for shareholders of Cairn India, consists of equity swap ratio of 1:1 and additional four preference shares of 10 each carrying 7.5% coupon with 18 months tenure. The ratio gives incremental benefit of 30/share for Cairn India s shareholders vs. the earlier ratio. We increased our Brent crude oil estimates to $55/bbl for Q4FY17 and FY18E, respectively. We have revised our estimates by factoring in lower Rajasthan oil realisation discount to Brent oil prices. We estimate Cairn s fair value at 270/share (Rajasthan fields at 112/share) assuming $ 55/barrel FY18E onwards and assuming no discount to cash and cash equivalent. At the current price, Cairn India is also trading at our assumed Brent crude price of ~US$55/barrel. We have a HOLD recommendation on the stock. ICICI Securities Ltd Retail Equity Research

Variance analysis Q3FY17 Q3FY17 Q3FY16 YoY (%) Q2FY17 QoQ (%) Comments Total Revenues 2,149.4 2,087.7 2,039.5 5.4 2,038.6 5.4 Revenue came in higher than our estimates due to higher than estimated Rajasthan crude realisation (lower discount of $3.4/bbl vs our estimates of $5.2/bbl to Brent prices) Operating Expenses 994.4 921.0 1,227.8-19.0 959.5 3.6 Higher operating costs in comparison to our estimates due to maintenance shut down of Mangala Processing terminal (MPT) at Rajasthan fields Employees Cost 22.4 18.2 31.6-29.0 17.8 26.0 Other Expenses 48.8 51.6 114.1-57.2 22.1 120.7 Total Expenditure 1,065.6 990.8 1,373.4-22.4 999.5 6.6 EBITDA 1,083.7 1,096.9 666.1 62.7 1,039.1 4.3 EBITDA margins (%) 50.4 52.5 32.7 1776 bps 51.0-55 bps Depreciation 726.0 773.4 893.0-18.7 781.8-7.1 EBIT 357.7 323.4-227.0-257.6 257.3 39.0 Interest 29.0 15.0 4.5 551.5 19.3 50.4 Other Income 523.9 525.0 141.9 269.1 534.9-2.1 Extra Ordinary Item -78.9-100.0 48.8-261.7 64.4 NA PBT 773.8 733.4-40.7-2,001.2 837.3 NA Total Tax 170.0 66.0-49.4-444.3 58.6 190.0 PAT 603.7 667.4 8.7 6,847.4 778.7-22.5 Higher tax rates led to low profitability Key Metrics Gross Production (bopd) 181819 181038 202668-10.3 196399-7.4 Net Production (bopd) 115829 115117 128402-9.8 125575-7.8 Rajasthan Prodtn.. (bopd) 154272 153001 170444-9.5 167699-8.0 Production was largely in line with the estimates considering maintenance shutdown of MPT at Rajasthan Change in estimates FY17E FY18E ( Crore) Old New % Change Old New % Change Comments Revenue 8,153.7 8,517.5 4.5 8,743.6 10,126.8 15.8 EBITDA 4,008.4 4,292.3 7.1 4,379.6 5,647.4 28.9 Estimates increased due to increased brent crude oil estimates and lowered Rajasthan discount to Brent crude oil prices EBITDA Margin (%) 49.2 50.4 123 bps 50.1 55.8 568 bps PAT 2,399.6 2,490.1 3.8 2,329.5 2,950.7 26.7 EPS ( ) 12.8 13.3 3.8 12.4 15.7 26.7 Assumptions FY15 FY16 FY17E FY18E FY17E FY18E Comments Gross Production (bopd) 211,671 203,727 191,523 195,212 192,554 196,681 Net Production (bopd) 132,664 128,197 122,331 126,087 122,975 126,968 Rajasthan Prodtn.. (bopd) 175,144 169,607 163,277 169,832 164,062 170,834 Realisation ($/bbl) 77.2 42.9 44.6 49.7 42.3 Lower discount of Rajasthan oil to Brent crude and increased oil price estimates 44.0 led to increase in realisation Brent Prices ($/bbl) 85.6 47.6 49.2 55.0 48.0 50.0 Increased crude oil estimates US$/ 61.0 64.6 67.3 67.5 67.1 67.0 Current Earlier ICICI Securities Ltd Retail Equity Research Page 2

Company Analysis Production performance in line with estimates In terms of production, Cairn India s Q3FY17 gross production numbers on a QoQ basis came largely in line with our estimates and reported a decline of 7.4% QoQ at 181819 boepd due to maintenance shut down at MPT in Rajasthan fields. Rajasthan gross production declined 8% QoQ to 154272 bpd vs. our estimate of 153001 bpd. Cairn India, through its various initiatives such as EOR, reservoir management has continued to optimise the production from naturally declining wells. Hence, we expect production from the Rajasthan field at 163277 boepd and 169831 boepd in FY17E and FY18E, respectively. Exhibit 1: Gross oil & gas production from Rajasthan fields (boepd) 220000 200000 180000 172224 168126 170444 167650 169607 166943 167699 154272 163277 169832 boepd 160000 140000 120000 100000 Q1FY16 Q2FY16 Q3FY16 Q4FY16 FY16 Q1FY17 Q2FY17 Q3FY17 FY17E FY18E The company plans to increase its gas production from RDG through the existing pipeline by installing additional compressors. It holds significant potential of 1-3 Tscf of GIIP. The estimated recovery has increased ~25%, and the recovery estimate till 2030 has increased to 86 mmboe. The growth in production in the existing fields will be achieved through the EOR programme in MBA field, further development of Barmer Hill and development of Rageshwari field. Exhibit 2: Net crude oil & gas production (boepd) trend 150000 140000 130000 130565 128021 128402 125775 128197 125391 125575 115829 122331 126087 boepd 120000 110000 100000 Q1FY16 Q2FY16 Q3FY16 Q4FY16 FY16 Q1FY17 Q2FY17 Q3FY17 FY17E FY18E ICICI Securities Ltd Retail Equity Research Page 3

Rise in operational costs due to maintenance shutdown The waterflood and blended operating cost at Rajasthan increased to $4.3/boe and $6.3/boe, respectively, in Q3FY17 against $3.9/boe and $5.8/boe, respectively, in Q2FY17. However, polymer injection was maintained at 0.4 mbpd. Operating costs are expected to normalise in Q4FY17. The company s focus remains optimistic with respect to cash flows especially in the current scenario of higher crude oil prices. Exhibit 3: Capex strategy FY16 FY17E Segment Value (mn $) % Allocation Value (mn $) % Allocation Development 193 78 80 80 Exploration 55 22 20 20 Total 248 100 100 100 Conference call highlights The planned maintenance shutdown at MPT in Rajasthan resulted in decline of production QoQ Sustained polymer injection at Mangala EOR led to increase in the average production at 55000 boepd for Q2FY17 from 52000 boepd in Q2FY17. Cairn India has maintained its planned capex at US$100 million in FY18E & FY19E Discount to Brent for Rajasthan crude declined to US$3.4/bbl from earlier US$4.3/bbl. Rise in Rajasthan s waterflood and blended cost by 10.2% and 8.6% QoQ to $ 4.3/bbl and $ 6.3/bbl respectively. RDG gas production declined from 31 mscfpd to 21 mscfpd due to suspension of gas sales on account of issues between grass-gas transporters and buyers For Aishwariya EOR and Barmer EOR, the polymer injection is planned to begin in H1CY18 and Q1CY19 respectively In the Barmer Hill front, Aishwariya Barmer Hill costs savings on the overall drilling and completion activity is being planned till 2030 and for Mangala Barmer Hill water flood pilot project is initiated to increase field pressure and oil recovery. Rageshwari Gas project is progressing as per plan. Completion of phase 1A is expected to increase the gas production from 40 million to 45 million scuffs per day by the end of H1FY18 The recent rise and expected sustained upswing in Brent prices will encourage investments and renewed exploration activities along with enhanced returns ICICI Securities Ltd Retail Equity Research Page 4

Highlights of the revised merger deal between Cairn and Vedanta Cairn India s minority shareholders will receive for each equity share held: o One equity share in Vedanta Ltd o Four 7.5% redeemable preference share in Vedanta Ltd with a face value of 10 each Implies a premium of 20% to Cairn India s one month VWAP. 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 Merger expected to complete in Q1 CY17 Sensitivity to change in Brent crude prices Our target price will change by ~ 10/share for every $5/barrel change in crude oil price. We have assumed an exchange rate of 67 per US dollar and Brent crude price of $55/barrel in perpetuity. Exhibit 4: Sensitivity of target price to exchange rate & crude oil prices Exchange Rate ( /US$) 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 54.0 204 212 221 228 237 244 252 260 268 56.0 205 214 222 230 238 246 255 263 270 58.0 206 215 223 232 240 249 257 266 273 60.0 206 216 225 233 242 251 260 269 276 62.0 207 217 226 235 244 253 262 270 279 64.0 208 218 227 236 246 255 265 273 282 66.0 209 219 229 238 248 258 267 276 286 68.0 210 220 230 240 250 260 270 279 289 70.0 210 221 231 241 252 262 271 282 292 ICICI Securities Ltd Retail Equity Research Page 5

Outlook and valuation The revised Cairn-Vedanta merger deal has been approved by the respective shareholders of Cairn India and Vedanta Ltd and is stated to effective by end of Q4FY17, post approval of jurisdictional High Courts and other regulatory entities. The approved proposal for the shareholders of Cairn India, consists of equity swap ratio of 1:1 and additional four preference shares of 10 each carrying 7.5% coupon with 18 months tenure. The ratio gives incremental benefit of 30 per share for Cairn India s shareholders vs. the earlier ratio. We increased our Brent crude oil estimates to $55/bbl for Q4FY17 and FY18E respectively. We have revised our estimates by factoring in lower Rajasthan oil realisation discount to Brent oil prices. We estimate Cairn s fair value at 270/share (Rajasthan fields at 112/share) assuming $ 55/barrel FY18E onwards and assuming no discount to cash and cash equivalent. At the current price, Cairn India is also trading at our assumed Brent crude price of ~US$55/barrel. We recommend HOLD rating on the stock. Exhibit 5: Valuation Crore (share) Rajasthan fields 25,552.6 136 Ravva 368.1 2 Cambay 363.9 2 Total 29117.5 140 Less: Net Debt -28,937.6-154 Equity Value 58055.1 295 Source: ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 6

Recommendation history vs. Company snapshot ( ) 400 300 200 100 70.0 60.0 50.0 40.0 30.0 20.0 10.0 (%) 0 Feb-15 Apr-15 Jul-15 Sep-15 Nov-15 Feb-16 Apr-16 Jul-16 Sep-16 Dec-16 Feb-17 0.0 Price Idirect target Consensus Target Mean % Consensus with HOLD Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event 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. Sep-16 Cairn-Vedanta merger gets approval from shareholders of both the respective companies. Top 10 Shareholders Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Vedanta Resources PLC 31/Dec/16 59.9 1122.7 0.0 2 Cairn UK Holdings, Ltd. 31/Dec/16 9.8 184.1 0.0 3 Life Insurance Corporation of India 31/Dec/16 9.1 169.8 0.0 4 HDFC Asset Management Co., Ltd. 31/Dec/16 1.1 20.8 4.4 6 Dimensional Fund Advisors, L.P. 30/Nov/16 0.7 13.6 0.0 7 Birla Sun Life Asset Management Company Ltd. 31-Dec-16 0.7 12.3 1.3 8 BlackRock Institutional Trust Company, N.A. 31/Jan/17 0.6 10.5 0.3 9 HSBC Global Asset Management (Hong Kong) Limited 31-Oct-16 0.4 7.4 0.0 10 Eastspring Investments (Singapore) Limited 31/Dec/16 0.4 6.6 0.0 Source: Reuters, ICICIdirect.com Research Shareholding Pattern (in %) Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Promoter 59.9 59.9 59.9 59.9 59.9 FII 13.1 16.0 15.8 15.3 14.8 DII 10.4 10.0 10.1 10.9 12.0 Others 16.7 14.1 14.3 14.0 13.4 Recent Activity Investor name Investor name Investor name Value (m) Shares Investor name Value (m) Shares HDFC Asset Management Co., Ltd. 15.54 4.36 Thompson, Siegel & Walmsley LLC -2.10-0.70 Birla Sun Life Asset Management Company Ltd. 4.55 1.28 Raiffeisen Kapitalanlage-Gesellschaft mbh -1.73-0.47 BlackRock Institutional Trust Company, N.A. 1.17 0.28 Harding Loevner LP -1.29-0.43 BlackRock Asset Management North Asia Limited 0.98 0.27 Templeton Asset Management Ltd. -1.49-0.42 HSBC Global Asset Management (Canada) Limited 0.74 0.21 Grantham Mayo Van Otterloo & Co LLC -1.14-0.38 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7

Financial summary Profit and loss statement Crore (Year-end March) FY15 FY16 FY17E FY18E Revenue 14,646.2 8,625.6 8,517.5 10,126.8 Growth (%) -21.9-41.1-1.3 18.9 Operating expense 4565.5 4649.9 3959.4 4149.4 Employee Cost 110.5 99.1 92.0 94.3 Administration Cost 349.5 251.7 159.6 155.7 Exploration Cost 1098.0 260.1 14.2 80.0 Total Expenditure 6123.6 5260.7 4225.2 4479.4 EBITDA 8,522.6 3,364.9 4,292.3 5,647.4 Growth (%) -37.6-60.5 27.6 31.6 Depreciation 2569.5 3107.2 3110.0 3319.1 EBIT 5953.2 257.7 1182.3 2328.2 Interest 20.4 27.0 91.2 100.0 Other Income 1284.9 1294.1 1987.2 1600.0 PBT 5609.5-9434.6 2939.0 3828.2 Growth (%) -56.3-268.2-131.2 30.3 Tax 1129.9-2.7 448.9 877.6 Reported PAT 4,479.6-9,431.9 2,490.1 2,950.7 Growth (%) -64.0-310.6-126.4 18.5 EPS 23.9-50.3 13.3 15.7 Cash flow statement Crore (Year-end March) FY15 FY16 FY17E FY18E Profit after Tax 4,479.6-9,431.9 2,490.1 2,950.7 Less: Dividend Paid 1,974.2 679.7 658.1 658.1 Add: Depreciation 2,569.5 3,107.2 3,110.0 3,319.1 Add: Others 536.2-169.0-150.0-150.0 Cash Profit 5,611.1-7,173.4 4,792.1 5,461.7 Increase/(Decrease) in CL -825.2-92.1 687.8 1,651.6 (Increase)/Decrease in CA -9,364.3-1,560.8-1,641.4-1,420.4 CF from Operating Activities -4578.4-8826.3 3838.5 5692.8 Purchase of Fixed Assets 1,336.6-10,146.8 655.8 1,040.0 (Inc)/Dec in Investments 6,077.7 179.3-500.0-500.0 Others 0.0 0.0 0.0 0.0 CF from Investing Activities 4,741.1 10,326.2-1,155.8-1,540.0 Inc/(Dec) in Loan Funds 0.0 0.0 0.0 0.0 Inc/(Dec) in Sh. Cap. & Res. 0.0 0.0 0.0 0.0 Others -1,072.9 33.9-284.6 0.0 CF from financing activities -1,072.9 33.9-284.6 0.0 Change in cash Eq. -910.3 1,533.8 2,398.1 4,152.8 Op. Cash and cash Eq. 1,761.9 851.6 2,385.4 4,783.5 Cl. Cash and cash Eq. 851.6 2,385.4 4,783.5 8,936.3 Balance sheet Crore (Year-end March) FY15 FY16 FY17E FY18E Source of Funds Equity Capital 1,874.9 1,874.9 1,874.9 1,874.9 Stock Options 0.0 0.0 0.0 0.0 Reserves & Surplus 56,995.3 46,917.7 48,465.1 50,757.7 Shareholder's Fund 58,870.2 48,792.5 50,340.0 52,632.6 Loan Funds 0.0 0.0 0.0 0.0 Deferred Tax Liability 1,271.8 1,102.8 952.8 802.8 Minority Interest 0.0 0.0 0.0 0.0 Source of Funds 60,142.0 49,895.3 51,292.8 53,435.4 Application of Funds Gross Block 28,059.9 28,797.6 29,347.6 30,197.6 Less: Acc. Depreciation 6,960.3 20,163.0 21,624.7 23,161.9 Net Block 21,099.6 8,634.6 7,722.9 7,035.7 Producing Properties 2,533.6 3,311.1 2,032.8 820.8 Capital WIP 5,906.7 4,340.2 4,076.0 3,696.0 Investments 15,233.4 15,054.1 15,554.1 16,054.1 Inventories 343.9 468.3 466.7 554.9 Debtor 1,125.0 257.1 700.1 832.3 Cash 851.6 2,385.4 4,783.5 8,936.3 Loan & Advance, Other CA 19,740.5 22,044.8 23,244.8 24,444.8 Total Current assets 22,061.0 25,155.5 29,195.1 34,768.3 Current Liabilities 4,018.0 4,057.8 3,967.1 4,716.6 Provisions 2,674.3 2,542.4 3,320.9 4,223.0 Total CL and Provisions 6,692.3 6,600.2 7,288.0 8,939.6 Net Working Capital 15,368.7 18,555.3 21,907.0 25,828.8 Miscellaneous expense 0.0 0.0 0.0 0.0 Application of Funds 60,142.0 49,895.3 51,292.8 53,435.4 Key ratios (Year-end March) FY15 FY16 FY17E FY18E Per share data ( ) Book Value 314.0 260.2 268.5 280.7 Cash per share 85.8 93.0 108.5 133.3 EPS 23.9-50.3 13.3 15.7 Cash EPS 37.6-33.7 29.9 33.4 DPS 9.0 3.0 3.0 3.0 Profitability & Operating Ratios EBITDA Margin (%) 58.2 39.0 50.4 55.8 PAT Margin (%) 30.6-109.3 29.2 29.1 Fixed Asset Turnover (x) 0.5 0.5 0.6 0.9 Inventory Turnover (Days) 8.6 19.8 20.0 20.0 Debtor (Days) 28.0 10.9 30.0 30.0 Current Liabilities (Days) 100.1 171.7 170.0 170.0 Return Ratios (%) RoE 7.6-19.3 4.9 5.6 RoCE 10.1 0.5 2.3 4.4 RoIC 13.9 0.8 3.9 8.4 Valuation Ratios (x) PE 11.5-5.4 20.6 17.4 Price to Book Value 0.9 1.1 1.0 1.0 EV/EBITDA 5.9 14.6 10.9 7.5 EV/Sales 3.4 5.7 5.5 4.2 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 3.3 3.8 4.0 3.9 Quick ratio 3.2 3.7 3.9 3.8. ICICI Securities Ltd Retail Equity Research Page 8

ICICIdirect.com coverage universe (Oil & Gas) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E Bharat Petroleum (BHAPET) 721 725 Hold 52,134 35.2 51.4 55.4 20.5 14.0 13.0 14.0 10.7 10.0 16.5 21.6 20.8 23.2 27.9 26.2 Cairn India (CAIIND) 274 270 Hold 51,969-50.3 13.3 15.7 11.5-5.4 20.6 5.9 14.6 10.9 10.1 0.5 2.3 7.6-19.3 4.9 Castrol India (CASIND) 418 504 Buy 24,926 12.4 13.5 14.3 33.6 30.7 29.2 22.2 19.7 18.7 148.7 158.7 163.9 106.9 110.0 114.1 GAIL (India) (GAIL) 483 505 Buy 61,268 24.0 18.1 30.9 20.2 26.7 15.6 14.8 15.8 10.7 9.6 7.6 11.7 10.4 7.5 11.7 Gujarat Gas (GUJGAS) 615 570 Hold 8,467 32.2 13.0 17.4 19.1 47.4 35.3 10.4 14.8 13.8 16.6 10.8 11.3 22.3 8.5 10.6 Gujarat State Petronet (GSPL) 164 180 Buy 9,239 7.3 7.9 9.0 22.5 20.8 18.2 11.2 11.9 10.7 15.2 13.5 14.8 11.3 11.2 11.7 Gulf Oil Lubricants (GULO) 693 780 Buy 3,435 20.2 24.0 25.3 34.2 34.2 34.2 21.3 19.1 18.2 34.5 37.0 35.9 40.4 37.1 31.8 Hindustan Petroleum (HINPET) 570 455 Hold 57,971 9.0 12.7 16.7 21.2 15.0 11.4 13.8 10.0 8.0 10.2 13.1 16.7 17.1 20.6 22.7 Indian Oil Corporation (INDOIL) 379 420 Buy 184,039 21.4 38.4 33.0 17.7 9.9 11.5 9.2 5.4 6.1 12.0 22.3 17.2 14.1 21.8 16.9 Indraprastha Gas (INDGAS) 1,021 1,140 Buy 14,210 31.3 29.7 41.3 32.5 34.1 24.6 17.8 17.8 13.3 28.7 25.4 28.1 20.9 17.2 20.1 Mangalore Refinery (MRPL) 108 122 Hold 18,929 6.6 12.8 12.5 16.5 8.5 8.7 7.4 6.1 6.2 7.4 22.5 19.0 17.9 27.8 22.7 Petronet LNG (PETLNG) 380 410 Buy 28,500 11.8 12.2 21.5 32.3 31.2 17.7 21.4 18.0 10.5 13.5 14.5 23.2 15.5 14.3 21.0 ICICI Securities Ltd Retail Equity Research Page 9

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 10

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ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Mayur Matani, MBA and Akshay Gavankar, PGDM, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities Ltd Retail Equity Research Page 11