This Navratna Company Stock Rallies By 84.76% In 3-Years, Gets Buy View For Potential Gain Of 22%

Navratna mid cap company, Oil India Ltd is a recommendation from Motilal Oswal. The leading brokerage house sees a significant upside of upto 22% from the stock of this India's second largest oil exploring and manufacturing company. This mid cap company's free float market capitalisation is Rs 8,611.75 crore. In three years time the share price has rallied by 84.76%. Recently this oil explorer and producer posted its 3QFY23 numbers and also shared details of its second interim dividend. Here are the details.

Buy stock of Oil India Limited, with a target price of Rs 272

Motilal Oswal noticed that Oil India Limited's Q3 results showed health realizations despite the windfall taxes. "Oil India reported higher-than-estimated EBITDA at Rs 28.6 billion, with 125% YoY growth in 3QFY23 due to lower-than-estimated other operating expenses during the quarter. Oil sales volumes were in line with our estimates at 0.77mmt while gas sales volumes were 5% below our estimates at 0.61bcm. Net oil realization, after accounting for the impact of windfall tax, came in at USD77.1/bbl for the quarter."

Valuation wise, the brokerage explained its estimation that it has take into consideration. "Our estimate suggests that the government is allowing a post-windfall realization of USD68-81/bbl and we expect the same to remain at ~USD70/bbl for FY24-25E. We model gas price assumptions of USD5.7/mmBtu for FY23-FY25E and forecast company's domestic oil & gas production to stand at 6.1 and 6.2mmtoe in FY24 and FY25, respectively. The stock currently trades at a P/E multiple of 5.4x FY24E earnings per share. We value the stock at 4x Dec'24E standalone adjusted earnings per share of Rs 43.2 and add investments to arrive at our target price of Rs 272. Maintain BUY."

Dividend details of Oil India Limited

In an exchange filing on 10th February, 2023, Oil India Limited intimated the board of directors decision of approving unaudited Q3 results along with second interim dividend details in the meeting held. "The directors of company board declared Second lnterim Dividend of Rs. 10/- per share (100% of paid-up capilal) for the financial year 2022-23. The interim dividend declared shall be paid on or before 12th March, 2023. It is decided that Wednesday, 22nd February, 2023 as the Record Date for ascertaining the eligibility of shareholders for payment of second interim dividend 2022-23."

Oil India Limited's share price movement

The current market price of the stock of this navratna company is Rs 240.65 per share, it has shot up by 7.67% on intra day basis. If you had purchased shares of this company three years ago, you would have got a massive return of 84.76% now. In one-year the share price has surged by 6.81%, its 52-week high is at Rs 306 per share and its 52-week is at Rs 168.30 per share.

Disclaimer

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