Morgan Stanley says Oil India 'underappreciated', sees 20% upside

The stock has more than doubled investors' wealth so far this year, jumping 133 percent.

Oil India shares rallied nine percent in trade on July 12 after international brokerage Morgan Stanley bumped up its target price on the company, seeing a 20 percent upside.

The brokerage turned more bullish on the state-run oil major, raising its target price to Rs 663 from Rs 497 per share.

At 1.40 pm, Oil India stock was trading at Rs 575.65, higher by 4.5 percent on the NSE.

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Among the reasons for the optimism, Morgan Stanley noted that the profits of the most profitable fuel refinery in Asia tripled in four years, while gas production doubled. Oil India also has 38 years of hydrocarbon reserve life monetisation and 14 percent CAGR in operating cash flow.

According to the brokerage, achieving these metrics in four years and at single-digit multiples is a standout factor. Another such factor is the 20 percent surge in the gas ASP over the years, as new wells drilled will extend growth.

Oil India's good dividend distribution and earnings are set to double by 2029. Currently, both are underappreciated by the Street.

The stock has more than doubled investors' wealth so far this year, jumping 133 percent as against a 12 percent in the Nifty 50 index.

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