OIL India IPO opens; should you subscribe?

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OIL India IPO opens; should you subscribe?

The initial public offering (IPO) of Oil India (OIL), the second largest oil and gas company in India, has received remarkable response from investors, especially QIB (qualified institutional investors).

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The initial public offering (IPO) of Oil India (OIL), the second largest oil and gas company in India, has received remarkable response from investors, especially QIB (qualified institutional investors).

The company's IPO of 26.45 lakh equity shares of face value Rs 10 each has opened for subscription. Its issue price is fixed at Rs 950-1050 per equity share and it will raise around Rs 2,512 - Rs 2,777 crore.

Moneycontrol.com conducted a poll among market experts to find out if you should subscribe to the issue or not. While most experts say 'subscribe', SP Tulsian and Sajeev Dhawan say 'avoid'. Moreover, those who advice to subscribe believe that this will be a long-term bet.

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Vibhav Kapoor of IL&FS said, Oil India issue was reasonably priced. "It is not too expensive but neither too cheap at this point of time. So it is more of a longer-term story but then it is in the ultimate sense a commodity stock. If oil prices go up it stands to gain but if oil prices go down then obviously it is not that good."

Manishi Raychaudhuri, MD and HOR at BNP Paribas Securities said, Oil India offered a decent upside at the lower end of the range. "At the upper end of the range, this is valued in line with ONGC. So, at the upper end of the range we are really telling investors to possibly look at ONGC rather than Oil India, but at the lower end of the price range it does offer a decent upside."

Avinash Gorakshakar, Head of Research at Reliance Money recommends to subscribe the issue with a long term perspective, as gains from the first one or two days listing price would not materially change the company's long term business upside which looks attractive. "On P/E and Price to Book, we believe that on a longer term perspective investors will make money." 

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