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What Should Investors Do If Oil India Shares Rise Over 8% and Rally 114 Percent in a Year?



On Thursday, Oil India shares rose 8% on the BSE and reached a high of Rs 302.80 that had not been reached in more than seven years. The state-owned oil exploration and production company's portion of the market was trading at its highest level since November 2014. On September 9, 2014, it reached a record high of Rs 334. The stock has soared 114% over the last year, while the benchmark Sensex index has only increased by 5.5%.

HDFC Securities analysts consider Oil India to be a good purchase. The brokerage firm had stated in a Q4FY22 result update report that "a target price of Rs 300 is dependent on an increase in crude price realization and improvement in domestic gas price realization."


On Wednesday, oil prices increased by almost 3% to 13-week high levels as US gasoline demand increased despite record pump prices amid hopes that China's oil demand will rise and because of mounting supply problems in numerous nations.

After the company posted strong earnings in the March 2022 quarter, the stock has increased 27% over the past month, compared to a 1% gain in the Sensex (Q4FY22).


The management of Oil India predicted in its analyst meeting that the year FY25E would be a turning point due to the commissioning of significant oil and gas expansion projects as well as the expansion of the Numaligarh Refinery (NRL). The completion of major projects in Assam will result in an increase in oil and gas production of 30% and 70%, respectively; the NRL refinery will be expanded to 9MTPA from 3MTPA by FY25E; windfall taxes won't be imposed after two years of low profits; and there won't be a price cap on gas prices, according to Prabhudas Lilladher in a note.

Oil India is in a good position to profit from rising oil and gas prices as well as strong GRMs, according to analysts at Prabhudas Lilladher. Based on 3.5x EV/E FY24E, they added, "We maintain our projections and hold 'BUY' with a PT of Rs 344."


Emkay Global, a brokerage firm, has a buy call with a target price of Rs 305 on Oil India. The analyst estimates that Oil India's share price can reach the specified target within a year. "We value oil using a DCF-based SOTP with upsides from Mozambique, NRL, and standalone (using DDM). Investments are priced at either our TP or CMP, with a Holdco discount of 30%, it stated. The biggest threats to the upside aim continue to be adverse oil-gas prices, political concerns, local tensions, cost overruns, operational interruptions, and dry holes. Because of increased capital expenditures, the brokerage cut the target price by 9%.


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