The rupee’s weakness, which aided realisations and resulted in foreign exchange gains, has boosted Cairn India’s performance in the September quarter.

Forex gain of Rs 429 crore in the recent quarter against a loss of Rs 786 crore a year ago perked up the company’s net profit 46 per cent. But remove these, and the profit growth is down to just 3 per cent.

One reason for the sedate growth is the lower realisation in dollar terms (down 1 per cent) on oil and gas sold by the company. This chipped away at the gains from the 3 per cent growth in output in the quarter.

Rajasthan field

Also, with Cairn intensifying exploration and production activity in its mainstay Rajasthan field, production and depreciation expenditure rose sharply. Besides, it did not help that other income almost halved from a year ago — a result of the sharp reduction in cash and equivalents from more than Rs 11,500 crore a year ago to Rs 4,456 crore as on September end.

On one hand, Cairn started paying out dividends since last October, and on the other, it is investing more in the business to boost output. The company remains confident of increasing production from the Rajasthan asset from around 178,000 barrels of oil equivalent a day at present to 200,000 units by the end of this fiscal year.

The stock has gained around 9 per cent over the past three months, in anticipation of gains from a weak rupee and hopes of rise in output. With the rupee staging a comeback from the lows of August, output growth will be key to the stock’s performance in the months ahead.

anand.k@thehindu.co.in

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