Oil India Ltd. share price target

Oil India Limited's (Oil India) Q1FY2020 PAT (adjusted for IND-AS 116) at Rs. 624 crore (down 11.3% y-o-y; down 23.8% q-o-q) was below our estimate due to: 1) lower-than-expected net oil realisation at $66.3/bbl; 2) miss in oil sales volume at 0.8mmt (down 1.6% y-o-y); and 3) lower-than-expected gas sales volume at 0.6bcm (up 2.7% y-o-y). Post the sharp correction in the stock price, Oil India is trading at attractive valuation of 5.6x its FY2021E EPS and offers strong dividend yield of 7-8%. Hence, we maintain our Buy rating on the...

Upstream companies were out of flavor despite realising market price for crude oil, mainly on account of the subsidy sharing with OMCs. We expect oil prices to remain muted owing to the robust supply from US Shale. This is despite production cuts from OPEC and non-OPEC countries. Thus, there is no concern over the subsidy sharing. OIL generates OCF yield of almost 30% and divided yield of ~8.5% over FY20/21E. The current valuations are contextually lower at 2.3x FY21E EV/EBITDA and 4.8x FY21 PER. Our TP is Rs 225/sh (6x Jun-21E standalone + Rs 84 from investments). Maintain BUY. We maintain BUY on Oil India post an in-line 1QFY20. Although we do agree that there are concerns over lack of production growth for OIL, we think that the current valuations (2.3x FY21 EV/EBITDA and 4.7x FY21 PER) indicate strong pessimism.

Oil India's (OINL) Q1 FY20 earnings at Rs 6.3bn (-11% YoY) was above estimates.

Lower other expenditure; total sales remain flat 1QFY20 revenue was flat YoY at INR33.7b (in line with est.). EBITDA was 6% higher than est. at INR13.5b (-4% YoY), due to lower total expenditure at USD7.1/boe (v/s USD8.8/boe in 1QFY19 and USD8.9/boe in 4QFY19). PAT was 11% lower YoY at INR6.2b (v/s gain of INR7.0b in 1QFY19 and loss of INR2.0b in 4QFY19, due to one-off exceptional item)....

Upstream companies were out of flavor despite realizing market price for crude oil, mainly on account of lower provisioning of budgetary support in FY19 (Rs 248bn). The subsidy sharing concern allayed when the Govt. committed to settle Rs 430bn of subsidy from its own pocket. Moreover, we expect the oil prices to remain muted owing to the robust supply from US Shale, despite production cut from OPEC and non-OPEC countries. Hence, given that (1) >80% revenue comes from crude oil, (2) There is no overhang of subsidy sharing, upstream companies should be re-rated. Our TP is Rs 234/sh (6x Mar-21E standalone + Rs 90 from investments). Maintain BUY. We agree that there are concerns over lack of production growth for OIL, however we think that the current valuations (3.8x FY21 EV/EBITDA and 6.5x FY21 PER) indicate strong pessimism.

Oil India Limited (OIL) is the second largest hydrocarbon exploration and production Indian public sector company with its operational headquarters in Duliajan, Assam, India.

Our TP is Rs 227/sh (6x Dec-20E standalone + Rs 82 from investments). Maintain BUY. OILs stock price has underperformed (-35%) the broader market (+4%) since Jan-18 (1) In the anticipation of subsidy sharing in a rising oil price environment and (2) Lower allocation of petroleum subsidy in the FY19 budget. The current stock price factors in the subsidy burden on the domestic Exploration and Production (E&P;) companies.

12 February 2019 Revenue increased 23% YoY (-6% QoQ) to INR35.1b, marginally ahead of our estimate of INR34.5b. Crude oil sales/production ratio stood at 97%, while realization was at USD66.7/bbl (in line with our estimate of USD66.8/bbl; +12% YoY, -9% QoQ). EBITDA grew 24% YoY (+3% QoQ) to INR15.2b (16% ahead of our estimate of INR13.1b), as other expenditure came in lower at USD6.4/boe +43% QoQ) came in above our estimate of INR8.5b due to higher other income Production of crude oil stood at 0.84mmt (-3% YoY, -2% QoQ) and of gas at 0.7bcm (-3% YoY, flat QoQ). Total production declined 3% YoY (-1% QoQ) to 1.53mmtoe.

term, stock performance will be range bound. We maintain our FY19/20E earnings. During Q3, core performance for IOCL improved led by better refining performance. Benign crude prices has pushed marketing margins in Q4, however, with global crude production cuts gaining momentum, and Central elections lined up in May, we maintain our cautious...

OIL's buyback plan to return 24% cash to shareholders To result in EPS accretion by 4.6%: The Board of Directors of OIL at its meeting held on November 19, 2018, approved the share buyback of up to 5.05 crore equity shares (4.45% of outstanding equity capital) through the tender offer route, aggregating to Rs. 1,086 crore at Rs. 215 per share. The buyback amount...