Oil India Q1 Review— Production Growth To Remain Key Monitorable; PL Capital Maintains 'Buy'
Given the significant production increase on the horizon, PL Capital re-iterate ‘Buy’ rating on Oil India.
The brokerage reaffirms its ‘Buy’ stance despite operational setbacks in Q1 FY26. While the PAT came in at Rs 8.1 billion, missing both the brokerage and Bloomberg consensus estimates by ~45%, the firm still revised its target price upwards, citing future production growth and NRL upside.
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PL Capital Report
Oil India Ltd. reported decline of 3% QoQ in oil sales while gas sales rose 5% QoQ. Oil price realization declined from $74.5/bbl in Q4 FY25 to $66.2/bbl during the quarter. The company wrote-off its investments of Rs 3.07 billion in Bangladesh.
Total other expenditure stood at Rs 16.9 billion against Rs 16 billion in Q4 FY25 and Rs 14.5 billion in Q1 FY25. Due to the higher other expenditure, Ebitda declined 19% QoQ to Rs 16.1 billion (our estimate: Rs 24.4 billion, our bloomberg Rs 22.8 billion) despite only 9% decline in sales QoQ.
PAT stood at Rs 8.1 billion (our estimate Rs 15.2 billion, our estimate Rs 14.2 billion). We build a conservative rise to 3.8 mmt of oil and 3.9bcm in FY27E, respectively from 3.4 mmt and 3.3 bcm in FY25.
Given the significant production increase on the horizon, we re-iterate our ‘Buy’ rating valuing the standalone business at 9x FY27 adj EPS and adding the value of investment in NRL to arrive at our target price of Rs 581.
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