Oil India Shares Surge 15% to Record High, Up 50% in 2024 with Further Upside Potential

Emkay Global has raised its target price for Oil India by 50% to Rs 670 per share, citing conservative assumptions in its earlier estimates and valuations.

Oil India Ltd shares reached a record high level in Thursday’s trade, with several brokerages maintaining a positive outlook on the PSU stock, which has surged 50% in 2024 and approximately 129% in the last year. The stock hit an all-time high of Rs 575.45 on BSE, marking a 15.33% increase for the day.

Emkay Global has increased its target price for Oil India by 50% to Rs 670 per share, attributing the adjustment to conservative assumptions in its earlier estimates and valuations. The company has consistently reiterated and met its growth targets, leading to increased confidence in its future prospects.

Emkay stated that NRL’s performance has improved, benefiting from high utilization, a stable debt trajectory, and favorable macroeconomic conditions, leading to better valuations for standalone refining peers. Following steady Q3FY24 consolidated results, Emkay has raised Oil India’s EPS estimates for FY24E-26E by 18-19%. Additionally, Emkay has increased its medium-term upstream estimates, resulting in a boost to the SA DCF value by Rs100 per share. Emkay noted that while it has shifted to a more realistic scenario, there are significant upside risks on the volume and gas pricing fronts.

Motilal Oswal Securities announced that it has revised its earnings per share estimate upward by 8% for FY24. Additionally, it has raised its revenue, EBITDA, and EPS estimates for FY25 by 4-13% and for FY26 by 5-14%. These revisions are driven by a robust outlook for oil and gas production, indicating optimistic prospects for the company’s future performance.

The quoted statement outlines the current trading multiples for Oil India, including a P/E ratio of 7.2 times FY25E EPS and an EV/EBITDA ratio of 5.5 times FY25E. The valuation model employed by the analyst values the stock at 7 times the standalone adjusted EPS for December 2025, plus the value of investments, resulting in a target price of Rs 650.

Meanwhile, YES Securities noted that Oil India’s Q3 earnings fell short of expectations, primarily due to higher other expenses and reduced crude realization. However, there was a significant surge of 397% YoY in other income, driven by interest/dividend income from investments.

“We have revised our volume estimates upward for FY25 and FY26 while maintaining an ADD rating on Oil India. Our revised target price for the stock is Rs 563 per share. We believe there is decent upside potential from the current market price,” stated the report.

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