Maharatna PSU oil company, Oil India is set to reward double treats to investors. The oil giant will not only deliver free bonus shares in the ratio of 1:2 but will also pay dividends up to Rs 3.75 per share. Brokerages like Elara Capital and Motilal Oswal recommended BUY on Oil India for target prices ranging from Rs 775 to Rs 823. There is a potential upside of nearly 30% in Oil India.
Oil India Share Price:
The PSU stock exited May month at Rs 635.40 apiece with a market cap of Rs 68,903.11 crore on BSE. The month-on-month performance was marginally up for Oil India. YTD, the stock is up by nearly 68%.
In a year, the stock skyrocketed by over 154% on BSE, making it a multi-bagger.
Oil India Bonus Issue:
The company has fixed Tuesday, 02nd July 2024 as the Record Date to determine the eligibility of shareholders to receive bonus shares. The bonus issue is in the ratio of 1:2, meaning Oil India will deliver 1 bonus share having a face value of Rs 10 each on every 2 existing bonus shares.
The bonus shares will be implemented out of free reserves which is at Rs 33,832.92 Crore as of March 31, 2024, of the company. Further, Oil India plans to complete the bonus issue on or before July 18, 2024.
This will be the fourth bonus issue by Oil India. Earlier, Oil India delivered a bonus issue of 1:2 in March 2018, while before that it distributed a 1:3 bonus issue in January 2017 and 3:2 bonuses in March 2012.
Oil India Dividend:
The company has approved a final dividend of Rs. 3.75 per equity share having a face value of Rs. 10/- each (pre-bonus), which translates into a final dividend of Rs. 2.50 per equity share having a face value of Rs. 10/- each (post-bonus) for the financial year 2023-24.
The final dividend would be paid within 30 days from the date of declaration at the AGM. The final dividend is in addition to the Interim Dividend of Rs. 3.50/- (pre-bonus) and the second Interim Dividend of Rs. 8.50/- (pre-bonus) paid for the financial year 2023-24. The record date for payment of the final dividend will be fixed and intimated in due course.
As per Trendlyne data, Oil India has delivered up to 35 dividends since February 2010.
BUY Oil India Shares:
Motilal Oswal On Oil India:
Production growth guidance remains robust, with drilling activity and development wells in old areas contributing to this growth. OINL is also applying new technologies to grow production. Capacity expansion for NRL (from 3mmt to 9mmt) would also be completed by Dec'25, which would drive further growth.
OINL remains a strong conviction at 1.3x FY26E P/B (standalone) valuation. It is a unique play to benefit from the strong multi-year uptrend in both upstream and refining. The stock currently trades at a P/E multiple of 8.4x FY26E EPS and 6.4x FY26E EV/EBITDA. We value the stock at 8.5x FY26E standalone adj. EPS and add investments to arrive at our TP of INR775. Maintain BUY.
Elara Capital On Oil India:
We reiterate OINL as one of the top picks among oil & gas stocks and raise TP to INR 823 from INR 685 on higher FY26E EV/EBITDA multiple assumptions at 7.0x (from 6.0x) on expectations of strong production growth in the next five years.
We maintain BUY - We assume long-term crude at USD 76/bbl and APM gas at USD 7.5/MMBtu (unchanged). We value OINL standalone at 7.0x (from 6.0x) FY26E EBITDA, 69.6% stake in NRL at INR 185/share @5.5x FY26E EBITDA and Mozambique stake at INR 18/share.
Oil India Limited (OIL) is a fully integrated Exploration & Production company in the upstream sector, with its origin dating back to the glorious year (1889) of oil discovery in India. A Maharatna Company, OIL is a state-owned enterprise of the Government of India, under the administrative control of the Ministry of Petroleum and Natural Gas and is the second-largest national oil and gas company in India.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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