Shares of Oil India jumped nearly 10% on Friday to hit a fresh 52-week high of Rs 617 on the NSE on favourable views by a couple of brokerages despite the company reporting a year-on-year (YoY) decline in its December quarter net profit.

US brokerage Morgan Stanley reiterated its overweight stance on Oil India shares while Motilal Oswal maintained a buy view.

The company announced its October-December quarter earnings on February 13, Tuesday after market hours and the stock has gained more than 30% since then. Today’s gains mark a streak of four successive wins.

The state-run company reported a net profit of Rs 1,584.28 crore which was down by 9.2% from Rs 1,746.10 crore reported by the company in the corresponding quarter of the previous financial year.

The leading fully integrated oil & gas company reported Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) for the nine months ended December 31, 2023, at Rs 8,474.47 crore which was up from Rs 8,399.17 crore in Q3FY23. The EBITDA margin also improved to 47.28% vis-à-vis 44.96% on the YoY basis. The Earnings Per Share (EPS) during the period stood at Rs 32.49 per share.

OIL achieved a 5.68% increase in crude oil production reaching 2.511 MMT compared to 2.376 MMT in the same period last year, the company filing said.Morgan Stanley remains ‘Overweight’ on Oil India with a target price of Rs 487. The company is growing well with bullish guidance, Morgan said in its stock review note. Oil India’s hydrocarbon growth and refining operations stood out on a global context, it noted.The company remains a key overweight play on refining margins with the potential to grow gas production significantly as its connectivity with India’s gas grid completes, Morgan said.

Meanwhile, Motilal Oswal said that its production outlook remains robust going forward and Oil India remains a strong conviction with a 1.2x FY25E P/B (standalone) valuation.

“It is a unique play to benefit from the strong multi-year upcycle in both upstream and refining. The stock currently trades at a P/E multiple of 7.2x FY25E EPS and 5.5x FY25E EV/EBITDA” Motilal Oswal said. It values the stock at 7X December 2025E standalone adjusted EPS and adds investments to arrive at the target of Rs 650 while maintaining a ‘Buy’.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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