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Buy Oil India, target price Rs 115: Motilal Oswal

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Motilal Oswal has given a buy rating to Oil India with a target price of Rs 115. The share price moved down by 2.41 per cent from its previous close of Rs 99.60. The stock’s last traded price is Rs 97.20.

Oil India Ltd., incorporated in the year 1959, is a Mid Cap company (having a market cap of Rs 10562.11 Crore) operating in Gas & Petroleum sector.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 1749.71 Crore, down 32.89 % from last quarter Sales of Rs 2607.38 Crore and down 48.25 % from last year same quarter Sales of Rs 3380.87 Crore. The Company reported net profit after tax of Rs -343.25 Crore in latest quarter.


oil india-graph
Investment Rationale
The company expects oil and gas production in FY21 to be marginally lower YoY. In line with the guidance, the brokerage has built-in oil production decline of 3% YoY (at ~3mmt) and flat production for gas (at ~2.7bcm) in FY21, with a ~4% YoY increase in oil (3.14mmt) and gas (2.8bcm) production in FY22. The stock trades at 5.6x FY22E EPS of INR17.8. The brokerage uses an SOTP-based fair value of 8x FY22E adj. EPS of INR14.4 and add investments to arrive at TP of INR115.

Promoter/FII Holdings
Promoters held 56.7 per cent stake in the company as of June 30, 2020, while FIIs held 7.2 per cent, DIIs 18.8 per cent and public and others 17.4 per cent.

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