Buy Oil India; target of Rs 495: Motilal Oswal

Motilal Oswal's research report on Oil India

Oil India’s (OINL) 4QFY25 revenue came in 7% above our estimate at INR55.2b (flat YoY), as both oil and gas sales stood above our est. Oil realization was USD74.9/bbl (vs our estimate of USD75.9/bbl). EBITDA came in line with our estimate at INR19.8b as other expenses came in above our estimate. However, reported PAT was 16% above our estimate at INR15.9b, due to higher-thanexpected other income and lower-than-expected finance cost, DDA, and tax rate. The core story still broadly remains intact – Numaligarh Refinery Limited (NRL)’s expanded capacity is on track for commissioning by Dec’25. Further, the ~1.5mmscmd DNPL capacity expansion by Oct’25 is expected to support production volume growth in the near term. The company continues to focus on exploration and aims to achieve 10-12mmtoe p.a. production by 2030.

Outlook

We arrive at our TP of INR495 as we model a 5%/6% production volume growth CAGR for oil and gas production over FY25-27. We value the standalone business at 6x FY27E P/E, existing NRL stake at 3.0x FY24 P/B, and include the value of equity invested to date in NRL capacity expansion. Reiterate BUY.

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