Indore Investment：1：2 Bonus Issue, 157.50% Dividend： BUY Maharatna PSU Stock Oil India For Highest Target Price Of Rs 766

Maharatna PSU giant in the field of oil and gas, Oil India Ltd is recommended to buy for target price ranging from Rs 700 to Rs 766. Brokerages Emkay Global and Prabhudas Lilladher are the latest to like this stock after Oil India reported healthy Q1 earnings for FY25, while its core outlook is steady. Oil India which has rewarded investors with bonus issue and hefty dividends in FY24, touched a new 52-week high on August 13.

After market hours of August 13, Oil India stock price ended at Rs 686.70 apiece, up by 2.8% on BSE with markt cap at Rs 1,11,699.16 crore. During the trading hours of this day, Oil India touched a new 52-week high of Rs 691.85 apiece.

Oil turned ex-bonus in July 2024, for a ratio of 1:2. Meaning, the company delivered 1 free bonus share on the existing two shares. In FY24, the company delivered as high as 157.50% dividend amounting to Rs 15.75 per share.

In Q1FY25, OIL reported a Profit After Tax (PAT) of Rs. 1,466.84 Crores with the contribution to the exchequer in the form of Special Additional Excise Duty (SAED) of USD 10.27/bbl in Q1 FY25 compared to USD 2.59/bbl in Q1 FY24 amounting to Rs.507.75 Cr in Q1 FY25 vis a vis Rs.113.55 Cr in Q1 FY24.

A provision of Rs. 203.90 Crores is kept towards Service Tax/GST on Royalty during Q1 FY25. The average Crude Oil price realisation for Q1 FY25 stood at USD 84.89/bbl, a 10.46% increase from USD 76.85/bbl for Q1 FY24, as per the financial report.

OIL's group's consolidated turnover for Q1 FY25 is Rs. 9,350.89 crores, up from Rs. 6,408.76 Crores in Q1 FY24. The consolidated Profit After Tax for Q1 FY25 is Rs.2,016.30 Crores, compared to Rs.1,399.49 Crores for Q1 FY24.

Oil India is the youngest Maharatna CPSE of Govt. of India, and it registered phenomenal growth in its Crude Oil and Natural Gas production with an increase of 6.22% in crude oil while the Natural Gas production is up by 9.80% in Q1 FY25 vis a vis Q1 FY24.

In its latest report, Prabhudas Lilladher said, "Oil India (OINL) reported an EBITDA of Rs24.7bn (up 5.6% QoQ, PLe: Rs25.2bn). PAT came in at Rs14.7bn (down 27.7% QoQ, PLe: Rs18.9bn) on standalone basis. The decline in PAT was on account of lower other income. Total oil and gas production grew by 2.7% and 1.6% QoQ, respectively. The company has guided for a production target of 4mmt of oil and 5bcm of gas by FY26."

Prabhudas' note added, "On a conservative basis, we build in 8% and 16% volume CAGR over FY24-26 to 3.9mmt of oil and 4.3bcm of gas, respectively, by FY26. Net oil realization at ~US$75/bbl continues to remain at comfortable levels and gas realization would rise by US$0.25/mmBtu to US$6.75/mmBtu from 1st Apr'25."

On the valuation, the brokerage said, "We maintain 'BUY' rating, valuing the standalone business at 12x FY26 adj

EPS and adding the value of investment in NRL to arrive at our TP of Rs766."

Meanwhile, Emkay Global in its note said, The management plans to drill 78/100 wells in FY25/26 vs 61 wells in FY24, with 1st phase of IGGL likely by commissioned by Dec-24, supporting gas growthIndore Investment. We hike FY25E-26E consolGuoabong Wealth Management. EPS by 6-7% each, led by better core outlook. We lift Sep-25E TP by 31% to Rs700 (implying Sep-26E consol. target P/E of 11.5x, from 10x) on likely gas pricing-led triggers and strong core. We retain BUY."

Overall, Emkay added, "We value OIL on a SOTP basis, comprising of SA and NRL, using DCF methodology; investments are valued at our TP/BV with a 30% Holdco discount. We retain our positive stance on OIL, on the back of growth in core production and stable operations at NRL, amid the ongoing expansion (likely to drive FY27 earnings). Key risks: Adverse oil and gas prices, policy issues, local tensions, cost overruns, outages, and dry holes."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.

Hyderabad Investment