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Last Updated : Jul 01, 2020 10:57 AM IST | Source: Moneycontrol.com

Buy Oil India; target of Rs 110: Motilal Oswal

Motilal Oswal is bullish on Oil India recommended buy rating on the stock with a target price of Rs 110 in its research report dated June 29, 2020.

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Motilal Oswal 's research report on Oil India


Oil India’s (OINL) 4QFY20 oil and gas sales were in line with estimates. However, EBITDA (excluding impairment) was 5% lower than estimates. The company recorded impairment and write offs of ~INR17.8b during the quarter. - For FY20, oil sales were down 5% YoY to 3.06mmt and gas sales were down 4% YoY to 2.4bcm, as operations were hampered due to (a) CAB (Citizen Amendment Bill) related protest for 10-15 days, and (b) lockdown in the last week of March. The company stated that current production is at ~90% of the normal levels. - Net oil realization for FY20 stood at USD60.8/bbl (v/s USD68.5/bbl in FY19), as crude oil prices declined sharply in 4QFY20 due to huge demand destruction led by the COVID-19 led lockdowns across the globe.



Outlook


We model in crude oil prices of USD40/50/bbl for FY21/FY22E. Note that a change of USD1/bbl in oil price impacts EBITDA by 4%. The stock trades at 5.6x FY22E EPS of INR17.1. We use an SOTP-based fair value of 8x FY22E adj. EPS of INR13.7 and add investments to arrive at a price target of INR110. Maintain Buy.





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First Published on Jul 1, 2020 10:57 am
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