Oil India, a Maharatna with a 65-year legacy in the oil and gas industry, saw its stock price climb an impressive 9.4% on the BSE over the trading week of November 4-8, 2024. Currently, the stock trades at ₹508.20 per share, showing a remarkable year-to-date (YTD) rally of 101.51%, making it a strong performer this year. Despite slightly missing Q2 FY25 earnings estimates, Motilal Oswal has maintained a positive outlook, setting a target price of ₹660 and suggesting a “BUY” rating. The brokerage firm notes that Oil India remains attractively priced after recent market corrections, with long-term growth potential still intact.
Motilal Oswal highlights Oil India’s ongoing developments as key drivers for future growth. The Numaligarh Refinery Ltd. (NRL) expansion project is progressing, with the aim of tripling capacity by FY26. Additionally, Oil India’s production growth strategy is supported by new drilling technologies and development wells in legacy areas. These improvements, along with expanding capacity at NRL, are expected to contribute significantly to production growth.
Oil India has also made strides in the critical minerals sector, recently securing the Phop Graphite and Vanadium Block in Arunachal Pradesh through a Ministry of Mines auction. This acquisition aligns with the government’s mission to reduce import dependence on critical minerals and enhance India’s position in the global mineral economy.
In terms of shareholder returns, Oil India has announced an interim dividend of ₹3 per share (30% of paid-up capital) for FY25, with the payment scheduled for December 4, 2024. The record date for eligibility is set for November 15, 2024. This latest dividend follows a series of substantial payouts in FY24, where Oil India distributed up to 145% of its paid-up capital, totaling ₹14.5 per share across three dividend payments. In addition, the company issued a 1:2 bonus in 2024, granting one bonus share for every two held, further rewarding long-term investors.
Overall, Motilal Oswal remains confident in Oil India’s potential, citing its attractive valuation, robust production targets, and commitment to expanding its resource base, both in oil and gas and in critical minerals essential to the future of green energy.
The information provided is for informational purposes only and should not be construed as financial or investment advice. Please consult with a qualified financial advisor before making any investment decisions. The author does not assume any liability for any financial outcomes based on the use of this information.
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