OINL reported in-line EBITDA at INR7.7b (-29% YoY, +23% QoQ). However, PAT was below est. at INR4.9b (est. INR6.2b; -36% YoY, +5.4% QoQ) due to lower other income of INR3.3b (est. INR4.9b) and higher tax rate at 36% (est. 33%). Despite lower net sales at INR21.3b (est. INR23.2b; -22.4% YoY, +12.3% QoQ) impacted by lower oil revenues, EBITDA was inline led by lower employee costs and statutory levies. MoPNG has directed OINL/ONGC to pay royalty on pre-discount basis effective February 1, 2014. OINL has already paid INR11.5b for this period and Assam government claim of INR87.7b for the period FY09 to FY14 has been recognized as a contingent liability by OINL.

Valuation and view: Our DCF based fair value stands at INR459 (WACC: 12%). The stock trades at 8.7x FY18 EPS of INR44.8. Dividend yield attractive at ~4%. Buy.