Oil India share price rallied 15 per cent in three days to Rs 251 apiece on BSE after the company reported highest-ever profit at Rs 1,630.01 crore in January-March quarter. The fourth quarter net profit was almost double of Rs 847.56 crore profit in same period last year as the oil-major got nearly $100 per barrel price for oil produced and sold. The board of the company also recommended a final dividend of Rs 5 per share for FY22. It had earlier paid an interim dividend of Rs 9.25 a share for the same fiscal. The total dividend for the year will be Rs 14.25 per share. The stock price has soared 83 per cent in one month.
At Least three domestic research firms have recommended to buy Oil India shares, and see up to 37 per cent potential rally. Analysts at Prabhudas Lilladher believe that Oil India’s earnings will ride on improving crude oil and gas realization, along with expansion of Numaligarh refinery (NRL) by 6 MTPA. “We cut our target multiple due to concerns of subsidy sharing given large marketing losses which should come off as global refiners come back from maintenance shutdown,” it said. The brokerage firm has pegged a target of Rs 344 apiece, an upside of 37 per cent.
HDFC Securities Institutional Equities Research has also recommended to buy Oil India stocks with a target price of Rs 300 on the back of an increase in crude price realisation and improvement in domestic gas price realisation. “Oil price realisation for FY22 improved to USD 76.7/bbl, vs USD 43/bbl in FY21, given the expected global economic rebound, post COVID. Q4FY22 revenue was 2% below our estimate, while EBITDA was 1% higher than the estimate, owing to lower-than-expected employee expenses and lower other expenses,” it said.
Analysts at Sharekhan also maintained ‘buy’ on Oil India with an unchanged price target of Rs 290 apiece. The research firm said that the recent sharp surge in crude oil prices and expectation of further steep hike in domestic gas prices from October 2022 would drive an 11% CAGR in OIL’s standalone PAT over FY2022-FY2024E and improve RoE to 14.3%. Moreover, the recent stake increase in Numaligarh Refinery Ltd (NRL) could create long-term value for OIL, it added. It noted that the stock is trading at 3.5x its FY2023E EPS (including earnings contribution from NRL) and offers a healthy dividend yield of 7%. “Likely windfall tax on upstream PSUs or LPG subsidy burden is a key risk to our earnings and valuation,” it said.