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Motilal Oswal Report
The brokerage firm ICICI Securities has raised its FY27E/FY28E earnings per share of Oil India Ltd. by ~4%/7% and introduce FY29E EPS of Rs 79.2.
The brokerage has maintaied a 'Buy' rating on the stock and has set a higher target price to Rs 600 from earlier Rs 545, implying a potential upside of 28% from the reports CMP of Rs 468. Oil India remains ICICI Securities' top pick.
The brokrerage highlighted that the stock has outperformed the broader market in the last six and 12 months, and it sees the momentum sustaining, as delivery of the expansion plans at both the upstream and downstream segments comes to fruition over FY27–29E (introduce FY29E EPS of Rs 72.9 with this note).
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At its revised estimates (factoring in stronger production and revisions to gas realisation estimates), EPS CAGR over FY26 –29E is a robust 25%, with steady expansion in return ratios and FCF – dividend yield of ~4% is a bonus.
Alongside, valuations of ~6x FY29E EPS and ~4x EV/Ebitda offer material upside.
Key upside risks:
- Stronger oil prices.
- Higher gas production.
- Stronger GRMs and higher petchem margins.
Key downside risks:
- Execution delays for NRL.
- Gas monetisation delays owing to infra delays.
- Regulatory cha
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nges capping oil realisations.
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