Buy Hindustan Oil Exploration Company; target of Rs 260: ICICI Direct

ICICI Direct's research report on Hindustan Oil Exploration Company

Hindustan Oil Exploration Company (HOEC) is India’s first private player in the upstream oil & gas sector. HOEC holds a portfolio of 11 blocks with eight onshore and three offshore blocks of which it has operatorship in 10 blocks • In FY23, standalone revenues were at Rs 381 crore, up 192% YoY, due to commercialisation of B-80 block in Mumbai Offshore and better realisation from Dirok field. Standalone EBITDA came in at Rs 195.3 crore, up 158% YoY. The company reported a PAT of Rs 178.5 core, up 398% YoY.

Outlook

We estimate revenue, EBITDA, PAT to grow 37%, 27%, 28%, respectively, during FY23- 25E and FCF yield/RoCE improving to 6%,18%. We initiate coverage under the Stock Tales format with a BUY rating. We value HOEC at Rs 260 per share (based on DCF).

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