Oil India Ltd - ACCUMULATE - TP Rs.381 - Result Update - Kotak

- Oil India's PAT for Q2FY18 is higher than our estimates. The company has reported meaningful increase in PAT to Rs6.5 bn (43% qoq and 11% yoy) mainly on account of higher crude oil realization, higher sales volume, lower other expenses and higher other income. We expect the stock to remain in focus due to the following triggers - Rising crude oil prices, potential increase in domestic gas price from 1st April 2018, and news flow of merger with IOC.

- We have factored in nil subsidies for FY2019, at our Dated Brent crude price assumption of US$59/bbl for FY19. We expect OINL to report an EPS of Rs. 34.7 FY18E (earlier Rs.33.1) and Rs. 38.6 in FY19E (earlier Rs.35.6) reflecting higher realization. On the basis of our estimates, we believe the stock is now attractively valued at 11.4x P/E and 6.2x P/cash earnings on the basis of FY19E. Due to recent run up in the share price, we now recommend Accumulate (earlier BUY) on OINL with a revised price target of Rs. 381 (earlier Rs.317). Improvement in crude oil/gas prices, production ramp-up and weak rupee due to geo-political risk will be key positives for the company which will improve the earnings going forward.

Shares of OIL INDIA LTD. was last trading in BSE at Rs.354.5 as compared to the previous close of Rs. 350.9. The total number of shares traded during the day was 46302 in over 703 trades.

The stock hit an intraday high of Rs. 357 and intraday low of 348. The net turnover during the day was Rs. 16370409.

Source : Equity Bulls

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