Emkay Global Financial recommended hold rating on OIL India with a target price of Rs 95 in its research report dated June 29, 2020.
Emkay Global Financial's report on OIL India
Oil India reported Q4FY20 standalone revenue/EBITDA loss/PAT of Rs25.9bn/11.0bn/9.26bn. EBITDA was impacted by ~Rs15bn of exceptional provision and impairment coupled with Rs3.2bn of forex loss. OIL moved to the new lower tax rate. Crude oil (incl. JV, condensate) production fell 3% yoy (up 1% qoq) at 0.76mmt, while gas fell 8% yoy/qoq to 0.65bcm. LPG output increased by 23% qoq to 8.5kt (down 8% yoy). Gas sales/production fell from 87% to 83% qoq vs. flat last fiscal. Nominated Block crude realization fell 18% qoq to USD52.2/bbl, with premium to Brent at USD1.6/bbl (vs. USD0.7 in Q3). Gas realization was flat. Depletion fell 80% yoy/qoq due to 1P reserve revision. Other Income included Rs3.2bn of income tax refund interest.
We raise FY21/22E EPS by 10%/1% on low future provisions and tax rate. However, due to higher debt and lower investment value, we reduce the FY22E-based TP by 5% to Rs95. Maintain Hold and UW in EAP. Gas pricing reforms and output recovery are key triggers.
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