Oil India share price surges 15% in 5 days, brokerages expect another 23% rally; should you buy?

Shares of Oil India have surged 15 per cent in 5 days as Brent crude oil prices rose. In comparison, the Nifty 50 index has dropped 1 per cent. Analysts at HDFC Securities believe that Oil India is a favourable buy.

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Brokerage firm Emkay Global has buy call on Oil India with a target price of Rs 305.

Shares of Oil India have surged 15 per cent in 5 days as Brent crude oil prices rose. In comparison, the Nifty 50 index has dropped 1 per cent. Oil India stocks jumped over 5 per cent in the previous session as oil prices rose more than $2 in early trade after Saudi Arabia raised prices sharply for its crude sales in July. Analysts at HDFC Securities believe that Oil India is a favourable buy. “A target price of Rs 300 is premised on increase in crude price realisation and improvement in domestic gas price realisation,” the brokerage firm had said in a Q4FY22 result update report. Oil India shares were trading flat at Rs 278 on BSE intraday.

Should you buy, hold or sell Oil India shares?

Prabudas Lilladher: Buy
Target price: Rs 344, Upside: 23%

Oil India management in its analyst meet guided strong volume growth FY25E to be a watershed year, driven by commissioning of major oil and gas expansion along with Numaligarh Refinery’s (NRL) expansion projects. Some key highlights include Oil and gas production to increase by 30% and 70% respectively post completion of major projects in Assam; NRL refinery’s expansion to 9MTPA from current 3MTPA to come on stream by FY25E; No imposition of windfall taxes after two years of depressed profits; and No price cap on gas prices. Analysts at Prabhudas Lilladher believe that Oil India is well placed to benefit from rising oil and gas prices and high GRMs. “We maintain our estimates and retain ‘BUY’ with a PT of Rs344 based on 3.5x EV/E FY24E,” they said.

Emkay GLobal: Buy
Target price: Rs 305, Upside: 9.7%

Brokerage firm Emkay Global has buy call on Oil India with a target price of Rs 305. Time period given by the analyst is one year for when Oil India share price can reach the defined target. “We value OIL on a DCF-based SOTP that includes standalone, NRL (using DDM) and Mozambique upsides. Investments are valued at our TP or CMP, with a 30% holdco discount,” it said. Adverse oil-gas prices, policy issues, local tensions, cost overruns, operational outages and dry holes remain the key risks to the upside target. The brokerage lowered target price by 9%, factoring in lower dividends from NRL due to capex.

Kotak Equities: Buy
Fair Value: Rs 285, Upside: 2.5%

Brokerage firm Kotak Institutional Equities has upgraded Oil India stock to “add” and raised its fair value target to Rs 285, implying an upside of 2.5 per cent from June 6 close. The upgrade in the rating is driven by the change in the brokerage firm’s assumption of crude oil prices in the current and next financial year. “We upgrade Oil India to add with a fair value of Rs 285 given elevated oil prices will sustain for longer, driven by unyielding geopolitical issues, a tight supply situation and declining global inventories,” the brokerage firm said in a note.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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