60.47% In 3 Months! ICICI Direct Recommends Buy This Small Cap Oil Stock, Sees 25% Gains

ICICI Direct is positive on Hindustan Oil Exploration Company Ltd. (HOEC), initiating Buy on the stock with a target price of Rs 260 apiece. The stock is likely to give a decent return of up to 25% if purchased at the current market price.

It is a small cap Oil sector stock. It has a market capitalisation of Rs. 2,751.32 crore.

Buy stock for a Target Price of Rs. 260 apiece

According to ICICI Direct, In the near term, the management plans to reduce the outstanding loans from banks from Rs. 250 crore to less than Rs.100 crore in FY24, by utilising CFs generated due to higher B-80 production. On the developmental front, the company will initially spend Rs. 64 crore to drill wells in PY-1 (in Q4FY24). Then, in the medium to long term, it will proceed towards drilling more wells in blocks like Dirok (post FY24), B-80 (FY26-27), Cambay (post environmental clearance), etc.

The brokerage said, "We estimate revenue, EBITDA, PAT to grow 37%, 27%, 28%, respectively, during FY23- 25E and FCF yield/RoCE improving to 6%,18%. We initiate coverage under the Stock Tales format with a BUY rating. We value HOEC at Rs. 260 per share (based on DCF)."

Stock Outlook

On Monday, the stock of HOEC closed 1.19% higher at Rs. 208.05 apiece. Its 52 week low at Rs. 115.75 apiece and 52 week high at Rs. 212.40 apiece, respectively.

It surged 1.56% in 1 week. It has given 17.41% positive return in 1 month. It gave 60.47% multibagger return in 3 months. In 1 year, it jumped 13.94%. It has given 186.37% positive return in 3 years. It has given 58.03% positive return in 5 years.

About - Hindustan Oil Exploration Company Ltd. (HOEC)

Hindustan Oil Exploration Company (HOEC) is India's first private player in the upstream oil & gas sector. HOEC holds a portfolio of 11 blocks with eight onshore and three offshore blocks of which it has operatorship in 10 blocks. In FY23, standalone revenues were at Rs. 381 crore, up 192% YoY, due to commercialisation of B-80 block in Mumbai Offshore and better realisation from Dirok field. Standalone EBITDA came in at Rs. 195.3 crore, up 158% YoY. The company reported a PAT of Rs. 178.5 core, up 398% YoY.

Disclaimer - The stock of HOEC has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.