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Buy Oil India, target price Rs 110: Motilal Oswal

Motilal Oswal has given a purchase score to Oil India Ltd with a goal value of Rs 110. The share value moved down by -0.99 per cent from its earlier shut of Rs 95.65. The inventory’s final traded value is Rs 94.70.

Oil India’s 4QFY20 oil and fuel gross sales had been according to brokerage estimates. Nonetheless, EBITDA (excluding impairment) was 5 per cent decrease than estimates. The corporate recorded impairment and write offs of Rs 17.eight billion in the course of the quarter. For FY20, oil gross sales had been down 5 per cent 12 months on 12 months to three.06 mmt and fuel gross sales had been down four per cent 12 months on 12 months to 2.4bcm, as operations had been hampered because of (a) CAB (Citizen Modification Invoice) associated protest for 10-15 days, and (b) lockdown within the final week of March. The corporate acknowledged that present manufacturing is at ~90 per cent of the conventional ranges.


Funding Rationale


Oil India has acknowledged that it witnessed blowout at one of many fuel producing wells in Baghjan area throughout work-over operation on 27th Might’20. The trouble to manage the blowout on the earliest remains to be on with skilled groups of Oil India, ONGC and worldwide consultants. As a result of blowout, there’s a manufacturing lack of about 80,000 scmd of pure fuel, which is only one per cent of Oil India’s each day pure fuel manufacturing.

The corporate has talked about that marginal decline in manufacturing might be anticipated for FY21. The corporate mentioned that it intends including fuel manufacturing of ~5msmcmd beginning 2024-25 (on present 7.5mmscmd), whereas arresting the decline in oil manufacturing.

The Numaligarh Refinery acquisition is prone to be performed by a consortium of Oil India and different Indian PSUs. The corporate expects the acquisition to occur concurrently with the privatization of BPCL.

Motilal Oswal has modelled crude oil costs of $40/50/bbl for FY21/FY22E. It’s to be famous {that a} change of $1/bbl in oil value impacts EBITDA by four per cent. The inventory trades at 5.6 occasions FY22E EPS of Rs 17.1. The brokerage has used an SOTP-based honest worth of eight occasions FY22E adjusted EPS of Rs 13.7 and added investments to reach at a value goal of Rs 110. It maintains a purchase score.

Oil India-MotilalOswalJune302020

Supply: Motilal Oswal


Financials

For the quarter ended March 31, 2020, the corporate reported consolidated gross sales of Rs 2607.38 crore, down -11.83 per cent from final quarter gross sales of Rs 2957.19 crore and down -15.82 per cent from final 12 months similar quarter gross sales of Rs 3097.26 crore. The corporate reported internet revenue after tax of Rs 1122.20 crore within the newest quarter.

Promoter/FII Holdings


Promoters held 56.66 per cent stake within the firm as of March 31, 2020, whereas FIIs held 6.58 per cent, DIIs 19.23 per cent and public & others 17.53 per cent.

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