Brent at $124/bbl: Oil India hits over 7-year high; zooms 114% in one year

Oil India is well placed to benefit from rising oil and gas prices and high gross refining margins, analysts said.

The stock of Oil India hit an over seven-year high of Rs 302.80 as it rallied 8 per cent on the BSE in Thursday’s intra-day trade, on the back of strong outlook based on increase in crude price and domestic gas price realisations. In comparison, at 10:37 am, the S&P BSE Sensex was flat.

The share of the state-owned oil exploration & production was quoting at its highest level since November 2014. It had hit a record high of Rs 334 on September 9, 2014. In the past one year, the stock has zoomed 114 per cent, as compared to a 5.5 per cent rise in the Sensex benchmark. 

Oil prices jumped about 3 per cent to 13-week high levels on Wednesday, as US demand for gasoline continues to rise despite record pump prices on expectations that China's oil demand will increase, and due to growing supply concerns in several countries.CLICK HERE FOR DETAILS

In the past one month, the stock has rallied 27 per cent, as against a 1 per cent gain in Sensex, after the company reported strong earnings in March 2022 quarter (Q4FY22).

Its turnover and profit after tax (PAT) increased by 74 per cent and 92 per cent, respectively. The company said it reported its highest-ever quarterly net profit of Rs 1,630 crore in Q4FY22, as it received nearly $100 a barrel price for oil - produced and sold. The net profit during the quarter almost doubled, as compared to Rs 847.56 crore profit in the same period last year.

Brokerage Prabhudas Lilladher maintains its ‘buy’ rating on Oil India with a price target of Rs 344 per share as it believes the company is well placed to benefit from rising oil and gas prices and high gross refining margins. The FY25E EBIDTA can increase to Rs 21,000 crore (FY22-Rs 10,500 crore) on higher volumes, it said. 

The company's management has guided for strong volume growth expecting FY25E to be a watershed year, driven by commissioning of major oil and gas expansion along with Numaligarh Refinery’s (NRL) expansion projects.

Some key highlights for the company, noted by Prabhudas Lilladher, include oil and gas production to increase by 30 per cent and 70 per cent respectively post completion of major projects in Assam; the NRL refinery’s expansion to 9MTPA from current 3MTPA to come on stream by FY25E; no imposition of windfall taxes after two years of depressed profits and no price cap on gas prices, it said in an analyst meet update report.

Tech view

Target: Rs 359

Support: Rs 290

As Brent crude prices resumed their uptrend in June, shares of Oil India have rallied 27 per cent on the BSE during this period. With today's surge, the shares have surpassed their immediate resistance of Rs 290 on the daily charts.

A decisive close above this level may lead the stock to its next resistance level of Rs 325, followed by Rs 359, as per the yearly Fibonnaci charts.

The price-to-moving averages' action reflects a firm trend in the shares. Besides, the Directional Index (DI) and strength in MACD, too, support a positive outlook. 
 

However, investors need to be wary of the fact that the Relative Strength Index (RSI) is in the overbought zone, although the stock price hasn't faced any pressure so far. Moreover, the slow stochastic indicator, too, hints at mild slowdown in the rally.

(With inputs from Nikita Vashisht)