Buy Oil India; target of Rs 711: Prabhudas Lilladher

Prabhudas Lilladher's research report on Oil India

Oil India (OINL) reported an EBITDA of Rs21.3bn (down 2.3% QoQ, PLe: Rs21bn, BBGe: Rs23.6bn). PAT fell 33.4% QoQ to Rs12.2bn (PLe: Rs14.9bn, BBGe: Rs14.9bn) on standalone basis. Decline in PAT was primarily due to 78% lower other income in Q3. While oil production grew 1.4% YoY, gas production grew by 0.9%. The company has guided for a production target of 3.5mmt of oil and 3.3bcm of gas for FY25. Long-term production guidance stands at 4mmt of oil and 5bcm of gas. We build in a 7% and 15% volume CAGR over FY25-27E, to 4mmt of oil and 4.4bcm of gas, respectively.

Outlook

Given the significant production increase on the horizon we re-iterate our ‘BUY’ rating valuing the standalone business at 10x FY27 adj EPS and adding the value of investment in NRL to arrive at our TP of Rs711.