Buy Oil India; target of Rs 755: Sharekhan

Sharekhan is bullish on Oil India has recommended buy rating on the stock with a target price of Rs 755 in its research report dated March 04, 2024.

Broker Research

March 05, 2024 / 14:12 IST

Buy

26 Aug, 2025 12:21

Volume

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Sharekhan's research report on Oil India

Management expects oil/gas production to register a robust CAGR of 8%/26% over FY2024E-FY2026E, led by higher drilling activity. We have increased our FY2024-FY2026 earnings estimate by 3-16% to factor higher oil and gas production and lower operating cost. Stability in oil and gas realisation along with recovery in oil/gas production to drive 11% CAGR in standalone earnings over FY2024E-FY2026E. Consolidated earnings to benefit from NRL expansion. Valuation (including earnings contribution from NRL) of 6.8x FY2026E EPS seems reasonable, and the stock offers a healthy dividend yield of 3-4%. The valuation would look further attractive if we include incremental earnings from NRL expansion. A potential IPO for NRL could unlock value for investors going forward.

Outlook

Oil India Limited’s (OIL) current market capitalisation does not fully reflect the value of Numaligarh Refinery Limited’s (NRL’s) expansion. The 3x expansion in refinery capacity to 9mtpa and high GRM (given excise benefit) would mean valuation of Rs. 34,017 crore for OIL’s 70% stake in NRL. We upgrade OIL to Buy (from Hold) with increased PT of Rs. 755.

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