Oil India Ltd. share price target

Given the pickup in fuel demand post COVID-19 lockdown coupled with IOCL's current capex plans, margins to improve over the long term. Also, the stock is currently available at attractive valuations. We hereby reiterate our BUY rating with a revised TP of Rs. 96 based on SOTP. Topline declines with low fuel demand IOCL recorded revenue of Rs. 88,937cr, a fall of 40.8% YoY, due to nationwide lockdown and lower capacity utilization in April. Petroleum Products sales fell 41.6% YoY to Rs. 85,197cr, due to de-growth of gasoline and gas oil. Petrochemicals fell 27.9%...

Lower than expected results: IOCL reported lower than expected Q1 results with standalone EBITDA of Rs55.1bn (PLe 150 bn) and PAT of Rs19.1bn (PLe Rs83.1bn). Lower operating profit was due to 1) inventory losses of Rs31.9bn (PLe +Rs17.7bn) and 2) lower than expected GRMs. Q1 EBIDTA adjusted for inventory and forex loss was at Rs86.3bn. For Q1 IOC followed accounting norms to value crude at cost or net realizable value whichever is lower- crude valued at Q1 end was t USD32.6/bbl vs Q4 end price of USD36/bbl. With crude...

Oil India Limited's Q4FY2020 adjusting PAT stood at Rs. 502 crore (down 38.6% y-o-y), which was above our estimate of Rs. 462 crore. The beat was on the account of higher-than-expected other income at Rs. 673 crore (which excludes one-time interest income of Rs. 321 crore on tax refund) and lowerthan-expected DD&A; expenses (down 40.4% y-o-y) partially by weak gas sales volume (down 14.4% y-o-y; down 11.2% q-o-q) and higher operating cost excluding provision (up 44% y-o-y). Oil sales volume at 0.75mmt (down 3.7% y-o-y; up 3% q-o-q) was in-line with our estimates and net oil realisation at $52.2/bbl (down 15.5% y-o-y; down 17.5% q-o-q) was marginally ahead of...

Oil India (OIL) Q4FY20 reported first-time ever negative EBITDA on the back of lower volume and realization. However, due to higher other income and deferred tax writeback OIL reported 51.5% YoY growth in net profit. Revenue was down 16% YoY to Rs26 bn owing to 3.4%/8.3% YoY decline in oil/gas production volume and 15.5%/3.2% drop in oil/gas realization in Q4FY20. We expect oil production to fall by 2% in FY21 and stable in FY22 due to natural decline. Also, gas volume to dip by 5% for FY21 before reaching to FY20 levels in FY22 on the back of Baghjan fire, flood and Covid-19. We forecast crude oil price (Brent) to average to US40/bbl and US$50/bbl in FY21 and FY22 vs US$60.9/bbl in FY20. We value it's core business at Rs55 (4.5x EV/EBITDA) and Rs58 for...

29 June 2020 OINL recorded impairment of INR12.3b considering the impact on lower crude oil and gas prices and the additional INR5.5b in the KG Basin. This totals to INR17.8b, which has been accounted for in other expenditure. However, we have classified the impairment and write-offs as part of DD&A.; Therefore, our EBIDTA stands at INR6.8b (v/s est. -5% and -38% YoY/QoQ) against EBITDA loss of INR11b reported by the company. Owing to the aforementioned adjustment, DD&A; for the company now stands at INR20.3b (translating to USD26.7/boe). Other income was higher at INR9.9b (INR4.2b in 4QFY20) due to higher dividend and interest income.

due to weak spot LNG price to make up for weak GRMs. We lower our FY21/22 earnings estimates as we update FY20 actuals. During FY20, core standalone EBIDTA adjusted for inventory and forex loss was healthy at Rs280bn (-10%YoY) despite lower refining margins ($0.08/bbl vs $5.4/bbl in FY19). Sharp drop in crude oil prices dragged down reported FY20 PAT, however, with recovering crude oil prices part of the losses to be...

During the quarter, the company witnessed decline in revenue of 16.0% YoY to Rs. 2,952cr. The revenue was suppressed by both the major segments of the company, Crude Oil and Natural gas, declining 16.2% YoY to Rs. 2,326cr and 12.1% YoY to Rs. 505cr, respectively. Crude oil revenue continued to be impacted by softened prices leading to a drop in price realization to Rs. 4,507/bbl from Rs. 4,805/bbl in Q3FY19. Environmental issues and lower demand led to the decline in Crude oil production by 10.9% YoY to 0.747mmt along with drop in Natural gas production by 4.8% YoY to 0.697bcm. Similarly, Crude oil sales weakened by 10.8% YoY to 0.726mmt and Natural...

We lower our estimates by 2-7% to factor in lower volume growth and realization. OINL stock has underperformed broader index due to weak volume trajectory and concerns of stake divestment by government. Capital allocation risk is also there given investments in Mozambique where returns will be back ended. We maintain Accumulate' with a price target of Rs186...

Oil India's (OINL) Q3FY20 earnings disappointed at Rs 4bn (67% YoY).

We reiterate our BUY rating on the stock given the sequential recovery in crude prices and expected GRM improvements over the next few quarters, with a revised target price of Rs. 135 based on SOTP. Revenue under pressure as crude prices remain soft In Q3FY20, revenue fell 9.6% YoY to Rs. 144,820cr (+9.4% QoQ) due to low throughput on account of shutdown of refineries for BS-VI upgradation. As a result domestic utilization of pipelines remained at only 88.7% (vs. 92.2% in Q2FY20). Amongst segments, Petrochemical witnessed steep declines of 24.0% YoY to 4,152cr, followed...

Benign crude prices is positive and will support marketing profits. We lower our FY20-22 earnings estimates to factor in lower refining margins. During Q3, core performance for IOCL was weak due to weak refining performance. While benign crude oil prices is likely to support marketing margins in medium term, refining scenario has worsened with muted demand...

Q2FY20 standalone revenue dropped 14.2% YoY as crude oil revenue continued to decline 20.5% YoY, offset to some extent due to the increase in natural gas revenue (+27.2% YoY). Crude oil sales volumes declined 4.9% YoY coupled with weak crude oil price realization (-16.5% YoY). However, natural gas production and sales volume increased by 1.8% YoY and 4.3% YoY respectively. EBITDA margin tapered by ~70bps YoY to 38.7%, while EBITDA...

We expect oil prices to remain muted owing to robust supply from US Shale, despite production cut from OPEC and non-OPEC countries. Thus, concerns over subsidy sharing are overrated. Upstream companies were undesirable despite realising market price for crude oil, mainly on account of the subsidy sharing with OMCs. OIL will generate OCF yield of almost 30% and divided yield of 7.5% over FY20/21E. The current valuations are contextually low at 2.8/2.1x FY21/22E EV/EBITDA and 5.2/5.0x FY21/22 PER. Our TP is Rs 230/sh (6x Sep-21E standalone + Rs 85 from investments). Maintain BUY. We maintain BUY on OIL post an inline performance in 2QFY20. Though concerns over lack of production growth still persist, we think that the current valuations (2.8/2.1x FY21/22 EV/EBITDA and 5.2/5.0x FY21/22 PER) indicate strong pessimism.

10 November 2019 2QFY20 revenue was 5% higher than est. at INR32.1b (-14% YoY), led by higher gas sale and higher than expected net realization. EBITDA was 12% lower than est. at INR12.4b (-16% YoY) due to higher employee cost (+37% YoY, +21% QoQ). Till 1HFY20, a total provisioning of INR4.4b has been made toward pay revision of Unionized Employees due from Jan17. Total other expenditure was lower at USD5.9/boe v/s USD9.4/boe in 2QFY19. PBT for the quarter was down 23% YoY to INR9.7b, led by higher depreciation cost of INR4.2b.

Oil India's (OINL) Q2 FY20 earnings at Rs 6.2bn (-27% YoY) was below estimates.

IMO2020 rules to support marketing and refining margins going forward. We lower our FY20E earnings estimates to factor in lower than expected H1 performance. During Q2, core performance for IOCL was weak; however, we expect operational performance to improve going forward. Benign crude price outlook given rising US supplies and weak global macros is likely to keep marketing margins buoyant. Also, implementation of IMO2020 will...

EBITDA fell 31.7% YoY and normalized Gross Refining Margin (GRM) stood at USD 2.27/bbl vs. Singapore benchmark GRM of USD 3.50/bbl. PAT dropped 47.4% YoY owing to lower margins on petroleum product, abnormally low cracks of petrochemical products, higher base effect in Q1FY19 (inventory gains of ~Rs. 7,800cr last year) and lease accounting adjustments during the quarter post adoption of IAS 116. While management remains focused on strengthening the Balance Sheet by reducing debt, uncertainties remain on commodity prices and...

Q1FY20 standalone revenue remained largely stable (-0.5% YoY) as crude oil revenue dropped 6.0% YoY, more-than-offsetting the 30.4% YoY growth in natural gas revenue. Crude oil sales volumes declined 1.6% YoY along with drop in crude oil...

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.