Motilal Oswal Places Buy On Oil Sector PSU Stock, Can Give 28% Return, Board Recommends 55% Dividend

Motilal Oswal maintains Buy on Oil India Ltd. (OIL), a Midcap Oil Sector Navratna category PSU Stock. The brokerage has assigned a target price of Rs 330 apiece. Given the target price, if you buy the stock at the current market price, it can fetch a 28% decent return.

On Wednesday, 24 May 2023, the Board of Directors of OIL in their meeting recommended a final dividend of Rs 5.50/share i.e. 55% of paid-up share capital for the financial year 2022-23.

Dividend Final Dividend of Rs 5.50/share

According to the regulatory filing by the Board of Directors of Oil India Ltd., "Recommended a Final Dividend Rs. 5.50/- per share (i.e. @55% of paid-up equity share capital) for the financial year 2022-23 subject to approval of the shareholders at the ensuing Annual General Meeting (AGM). The Final Dividend 2022-23 would be paid within 30 days from the date of its declaration at the AGM. The Record Date/Date of Book closure for payment of final dividend would be fixed and intimated in due course."

Valuation and view - maintain BUY

According to Motilal Oswal, The NRL expansion would be completed by FY24-25, with a capex of INR280b. The viability gap funding would be only INR10b. The capex would be funded via 70% debt and 30% equity, and this equity proportion would be entirely funded by internal accruals of NRL only. The commissioning of the refinery expansion (from 3mmt to 9mmt) is expected by FY25. "We use an SOTP-based fair value of 6x FY25E standalone adj. EPS of INR34 and add investments to arrive at our TP of INR330. Maintain BUY," the brokerage has said.

Stock Outlook

The last traded share price of OIL is Rs. 260.50 apiece. The stock traded its 52 week high on 10 June 2022 at Rs. 306 apiece and 52 week low on 28 September 2022 at Rs. 167.85 apiece, respectively. It has given 3.12% negative return in 1 week. It has given 14.38% positive return in 1 year. In 3 years, it has given 213.48% positive return. In 5 years, it has given 19.74% positive return.

Disclaimer - The stock has been picked from the brokerage report of Motilal Oswal. 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.