The price of Oil India share rose about 10 percent to Rs 250 each on BSE in the past four days after the company reported its highest-ever profit at Rs 1,630.01 crore in the January-March quarter. The net profit in the fourth quarter was almost double the profit of Rs 847.56 crore in the same period last year when the oil giant was paid close to $100 a barrel for the oil produced and sold. The company’s board of directors also recommended a final dividend of Rs 5 per share for FY22. It had previously paid an interim dividend of Rs 9.25 per share for the same fiscal year. The total dividend for the year will be Rs 14.25 per share.
Oil India Ltd is India’s second largest national oil and gas company and a Navratna company. It is a public company under the administrative jurisdiction of the Ministry of Petroleum and Natural Gas.
Analysts from Prabhudas Lilladher believe Oil India’s revenues will increase due to the improvement in crude oil and gas production along with the expansion of the Numaligarh Refinery (NRL) by 6 MTPA. “We have cut our target multiple times over due to concerns about grant sharing given the large marketing losses that should disappear as global refineries come back from maintenance shutdown,” it said. The brokerage firm has pegged a target of Rs 344 each, up 37 percent.
Sales increased 27 percent in the fourth quarter to Rs 4,972.91 crore, and 55 percent in the fiscal year to Rs 16,427.65 crore. Oil India’s revenue from operations in March 2022 was Rs 4,478.61 crore, up 73.62 percent from Rs 2,579.50 crore in March 2021, while the company’s earnings per share climbed to Rs. 15.03 from Rs. 7.82 in March 2021.
According to the brokerage firm Sharekhan, the company’s operating performance was mixed with in-line with crude oil realization of $98.1/bbl (up 24.8 percent qoq) while oil sales volumes of 0.73 mmt (0.8 percent cook) were. However, the gas sales volume was sharply disappointing with a decrease of 11.9 percent qoq to 0.56 bcm. Oil division EBIT grew strongly at 74.2 percent qoq to Rs. 2,089 crore due to the benefit of higher oil prices and gas EBIT turned positive to Rs. 77 crore (versus EBIT loss of Rs. 108 crore in Q3FY22), according to the brokerage.
The brokerage has said in a report that “the recent soaring in crude oil prices and the expectation of a further steep rise in domestic gas prices from October 2022 would increase a CAGR of 11 percent in OIL’s standalone PAT over FY2022-FY2024E.” In addition, the recent increase in stake in Numaligarh Refinery Ltd (NRL) could create long-term value for OIL, which is why we maintain a buy recommendation with an unchanged SoTP-based PT of Rs 290.”
The stock is trading at 3.5x its EPS for FY2023E (including earnings contribution from NRL). Probable windfall tax on upstream PSUs or LPG subsidy burden is a significant risk to our earnings and valuation, Sharekhan says. The company’s board of directors has also recommended a final dividend of Rs. 5/- per share, or 50 percent, for fiscal year 2021-22, subject to shareholder approval at the next Annual General Meeting (AGM). The company’s dividend yield for fiscal year 2021-2022 is 6.40 percent. The stock closed today at Rs 246 in the market, up 3.17 percent from yesterday’s close of Rs 238.45.
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