Oil India hits 8-month high on highest-ever quarterly profit in Q3FY23

Shares of Oil India rallied 8.5 per cent to hit eight-month high of Rs 242 per share in Monday's intra-day trade, after the company reported highest-ever quarterly profit of Rs 1,746.1 crore in the October-December quarter (Q3FY23) from Rs 1,244.9 crore, in the year-ago period.
 

The state-owned firm's total income, too, climbed 27 per cent year-on-year (YoY) to Rs 5,981 crore in Q3FY23 from Rs 4,705 crore in Q3FY22. Total expenses, meanwhile, surged 18.1 per cent YoY to Rs 3,678 crore, during the quarter.  
 

With today's rise in stock price, shares of Oil India have delivered 1.6 per cent returns so far this fiscal year (FY23). That apart, in the past six months, Oil India soared 26 per cent, as against 3 per cent rise in the S&P BSE Sensex. The stock had touched a 52-week high of Rs 306 per share on June 9, 2022.
 

The management said that a better pricing mix coupled with higher output of crude oil and natural gas helped the company clock highest-ever profitability in the third quarter of this fiscal year. Moreover, the turnover increased 27.13 per cent YoY to Rs 5,879.4 crore in Q3FY23.
 

Analysts at Motilal Oswal believe that the capex of Rs 28,000 crore would drive Numaligarh Refinery expansion and expect it to be complete by FY24-25E. Since the capex would be funded via 70:30 debt:equity ratio, the equity proportion would be funded by internal accruals of the refinery.
 

"The stock currently trades at a P/E multiple of 5.4x FY24E EPS (earnings per share). We value the stock at 4x Dec’24E standalone adjusted EPS of Rs 43.2 and add investments to arrive at our target price of Rs 272 per share," they added.
 

While Ebitda (earnings before interest, taxes, depreciation, and amortization) rose 32 per cent YoY to Rs 2,957.4 crore in Q3FY23, Ebitda margins expanded to 49.4 per cent during the quarter, from 47.52 per cent in Q3FY22.  
 

That said, the board declared a second interim dividend of Rs 10 per share, in addition to Rs 4.5 per share declared earlier. Therefore, the total interim dividend amounts to Rs 14.5 per share for the year.

Technical View

Bias: Positive

Target: Rs 250; Rs 262

Support: Rs 230.50

Resistance: Rs 245

Shares of Oil India exhibited high volatility in the last two weeks, with the stock tumbling over 13 per cent from its high of Rs 242 to hit a low of Rs 210, and then boomeranging back to Rs 242.

In the process, the stock has bounced back above its 20-DMA. Further, the bias as per the price-to-moving averages action also remains positive with the 20-DMA at Rs 230.50 fairly above the 50-DMA which stands at Rs 218.50. Both these levels are expected to act as supports for the stock.

On the broader time-frame, the stock has rallied 39 per cent in the last five straight months. 

The daily chart suggests that the stock is currently facing some resistance around the trend line at Rs 239.40. Break and sustained trade above the same can push the share price to its next hurdle at Rs 245.

The weekly chart indicates that the bias is likely to favour the bulls as long as the stock holds above Rs 241. The potential upside targets can Rs 250 and Rs 262.

(With inputs from Rex Cano)