Sharekhan has given Buy recommendation for Oil India with a target price of Rs. 290 in its research report issued on Feb 28, 2022

Sharekhan’s research report on Oil India

The earnings environment has turned favourable for upstream PSUs given expectation of a ~2x hike in domestic gas price (to turn gas biz. profitable) and recent spike in crude oil to >$100/bbl on geopolitical tensions between Russia-Ukraine. We expect a robust 40% PAT CAGR over FY21-24E for OIL with possibility of upgrades in case the geopolitical crisis does not ease. OIL is also expected to benefit from a cyclical recovery in refining margin as it holds 70% stake in NRL, which has superior GRM given excise duty benefit. Additionally, NRL’s 3x capacity expansion plan would create long-term value for OIL. Ambitious oil/gas production guidance of 3.4 mmt/4 bcm for FY23 versus FY22 annualised oil/gas production but a weak production track record makes us cautious and thus we model modest oil/gas production CAGR of 2%/4% over FY21-24E.

Outlook

We maintain a Buy rating on Oil India with an unchanged SoTP-based PT of Rs. 290 as upstream PSUs are best play on high oil & gas prices. The stock trades at 3.9x its FY2023E EPS (including earnings contribution from NRL).

More Info

At 17:30 Oil India was quoting at Rs 223.10, up Rs 0.85, or 0.38 percent.

It has touched an intraday high of Rs 225.70 and an intraday low of Rs 221.10.

It was trading with volumes of 71,129 shares, compared to its thirty day average of 96,328 shares, a decrease of -26.16 percent.

In the previous trading session, the share closed up 1.74 percent or Rs 3.80 at Rs 222.25.

The share touched its 52-week high Rs 267.70 and 52-week low Rs 112.00 on 01 October, 2021 and 12 April, 2021, respectively.

Currently, it is trading 16.66 percent below its 52-week high and 99.2 percent above its 52-week low.

Market capitalisation stands at Rs 24,193.08 crore.

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