Shares of Oil India, a Navratna PSU firm, extended their gains to Tuesday, rallying 6.51% to 256.70 apiece, an eight-month high. The strong rally was attributed to the company's solid performance in the December quarter.
On Monday, the stock rallied 7.81% after the company posted its highest-ever quarterly net profit of ₹1,746 crore for Q3FY23, compared to a net profit of ₹1,244 crore in the year-ago quarter.
The company is engaged in the business of exploration, development, and production of crude oil and natural gas, transportation of crude oil, and production of LPG.
It also reported its highest-ever quarterly revenue of ₹5,376 crore in Q3, an increase of nearly 44% YoY from ₹3,737 crore in Q3FY22.
The company earned $88.33 for every barrel of crude oil it produced and sold in the third quarter of the current fiscal year, up from $78.59 a barrel realisation in the year-ago period.
The company produced 0.81 million tonnes of crude oil in the October-December quarter, up from 0.75 million metric tonnes YoY.
The earnings per share (EPS) of the company improved to ₹16.10 in the October-December quarter from ₹11.48 in a similar quarter last year. During the July–September quarter, the company reported an EPS of ₹15.87.
The board also declared an interim dividend of Rs. 10 per share during the quarter. In the preceding quarter, the company announced a dividend of Rs. 4.50 per share.
The stock began to gain momentum after falling to its 52-week low of ₹167.8 per share in September of last year, and it has since increased by 53%. At the current market price, the stock needs to go 24% further to reach its all-time high of ₹334.98, which was achieved in 2014.
Following the company's strong performance, domestic brokerage firm Motilal Oswal maintained its "buy" call on the stock with a target price of ₹272 apiece.
Along similar lines, ICICI Securities said the company reported another quarter of robust earnings. The brokerage raised its earnings estimates for FY23E/FY24E EPS by 18% and 13%, respectively, owing to a marginally higher realisation on oil and above-average GRMs for NRL.
ICICI Securities reiterated its "buy" rating on the stock; however, it trimmed its target price marginally to ₹265 apiece from ₹267 earlier, due to marginally lower gas price estimates for the long term.
"We introduce our FY25E EPS estimates of Rs54.6/share with this note. "At these levels, valuations work out to just 4.4x FY25E EPS and 4.1x EV/EBITDA, which we think are extremely attractive," said ICICI Securities.
The brokerage also laid out key downside risks for the company, which include a sharp reversal in oil and gas price trends, policy measures to cap gas realisation at even lower levels, lower production, and lower GRM performance from NRL.
15 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
