Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Oil India - Analyst Meet Update - On a strong footing - BUY

Posted On: 2022-06-06 18:29:24 (Time Zone: IST)


Avishek Datta Research Analyst Prabhudas Lilladher Pvt. Ltd.

Quick Pointers:

- At an inflection point- as major oil and gas projects along with NRL expansion to come on stream by FY25E.

- Higher oil and gas realisations and strong GRMs to drive earnings.

We attended the analyst meet of Oil India (OINL). Management guided strong volume growth 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 are 1) Oil and gas production to increase by 30% and 70% respectively post completion of major projects in Assam 2) NRL refinery's expansion to 9MTPA from current 3MTPA to come on stream by FY25E 3) No imposition of windfall taxes after two years of depressed profits and 4) No price cap on gas prices. OINL is well placed to benefit from rising oil and gas prices and high GRMs and FY25E EBIDTA can increase to Rs210bn (FY22-Rs105bn) on higher volumes. We maintain our estimates and retain 'BUY' with a PT of Rs344 based on 3.5x EV/E FY24E.

Strong volume growth along with higher realisation: OINL has aggressive growth plans as it expects 30% increase in oil volumes to 4MTPA by FY25E, with commencement of brownfield expansion projects in Assam. Gas volumes will rise to 5bcm from current 3bcm, as the new gas pipeline in North East is commissioned. Gas evaluation challenge has led to lower production for OINL, however, start of the Indradhanush gas pipeline grid by FY25E (which connects eight states in North East) will boost gas demand fed by higher volumes from the Bagjan fields.

Cap on prices unlikely to be imposed: OINL doesn't expect any cap on gas prices and remains hopeful of another hike in Oct-22. Gas prices have increased from USD2.9/mmbtu to USD6.1/mmbtu for H1FY23.

NRL refinery- a prized asset: NRL is a highly complex refinery with Nelson complexity of 9.2. Also OINL's diesel and petrol volume accounted for 69%/15% of product slate and will benefit from sharp upmove in product spreads currently. In FY22, NRL (OINL has 69.6% stake) posted EBIDTA/PAT of Rs50.5bn/Rs35.6bn with a growth of 16% YoY/17% YoY. NRL remains a prized asset, as it retains 50% of excise on fuel sales. FY22 core GRMs were at USD14.3/bbl vs USD4.0/bbl in FY21, while additional excise benefits were at Rs35bn or USD24.7/bbl vs USD36/bbl in FY21. Lower excise benefit was due to cut in duty rates in November' 21. At current excise rates, peak excise earnings will be at Rs80bn p.a, on the expanded capacity as per company and has no sunset clause.

Russian investments continue to payoff: OINL had invested USD990mn in Russian oil and gas fields in CY16. Till FY22 end, the company received USD660mn in dividends from those investments. The company has not seen any drop in production as higher discounts will be offset by commensurate increase in realizations.

Capex plans: OINL spent Rs42.8bn on capex in FY22 and expects similar capex in FY23E. Exploration drilling is to account for 24% of FY23E capex, while capital equipment will account for 35% of capex.

Shares of Oil India Limited was last trading in BSE at Rs. 278.55 as compared to the previous close of Rs. 250.80. The total number of shares traded during the day was 666776 in over 13089 trades.

The stock hit an intraday high of Rs. 284.40 and intraday low of 253.25. The net turnover during the day was Rs. 178600293.00.


Click here to send ur comments or to feedback@equitybulls.com

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Gladiator Stocks - Minda Industries - ICICI Direct

Reliance Industries - Company Update - In fine fettle amidst global uncertainty - BUY

Sector Update - Sugar - ICICI Direct

Initiating Coverage - Hindustan Aeronautics Ltd - ICICI Direct

Rallis India - Company Update - Margin pressure likely to persist in near term..!! - Upgrade to 'BUY'

Indoco Remedies - Q4FY22 Result Update - In-line quarter; strong revenue guidance for US & EU mkt - Upgrade to 'BUY'

Indraprastha Gas - Q4FY22 Result Update - Impressive performance - BUY

KEC International - Annual Report Analysis - Healthy outlook across business segment - Accumulate

Westlife Development - Q4FY22 Result Update - Approaching the tipping point; Buy for LT Gains

Reliance Research downgrades Bajaj Auto to Sell

NOCIL - Q4FY22 Result Update - Strong operating performance amidst challenges - BUY

Gujarat Gas - Company Update - Deftly negotiating through tough times - BUY

Orient Electric - Gaining market share via innovation: initiate with ADD - ICICI Securities

Manappuram Finance - Q4FY22 Result Update - Intense Competition Put Pressure on Yields - BUY

Derivatives Weekly View - June 24, 2022 - ICICI Direct

Stock Tales - Newgen Software - ICICI Direct

Weekly Report - June 25, 2022 - Mr. Mitul Shah - Head of Research at Reliance securities

Gladiator Stocks - Bosch - ICICI Direct

Management Meet Update - Sheela Foam - ICICI Direct

Gladiator Stocks - Mahindra & Mahindra - ICICI Direct

Banks - Modifications to PPI and its impact on cards - Negligible impact, if any, for stocks under coverage

LIC Housing Finance - Q4FY22 Result Update - Fixed rate liabilities could cushion NIM - BUY

Navneet Education - Q4FY22 Result Update - Growth levers in place - BUY

MPC Minutes: Jun-22: All eyes on inflation - Acuité Ratings

Nazara Technologies - Management Meet Update - Breaking through the ESports landscape - BUY

Sector update - Quick Service Restaurants - YES Securities

JK Lakshmi Cement - Q4FY22 Result Update - Strong performance; Valuations drive upgrade - Accumulate

Would it be wise to invest in a home early in your career?

Dr. Reddy's Laboratories - Analyst Meet Update - Multiple growth initiatives - BUY

Dhanuka Agritech - Management Meet Update - 1Q likely to be subdued; all hopes pinned on the monsoons - BUY

BUY Ipca Laboratories - Q4FY22 Result Update - Weak exports; gradual recovery

Acuité expects India's current account deficit to widen to more than USD 90 bn in FY23 - Acuité Macro Pulse

Inflationary concerns will continue to weigh on the pace of economic revival in FY23 - Acuité Macroeconomic Performance index

City Union Bank - Q4FY22 Result Update - Asset quality on the mend - BUY

Banks - BNPL - Early results are not that exciting as yet - Kotak

Acuité expects FY23 GDP growth estimate at 7.5% - Acuité Macro Pulse - Growth - May-22 Edition

Base factor pushes up IIP in Apr-22 to an 8-month high - Acuité Ratings

India Strategy & Q4FY22 Review - Long term growth prospects to overshadow near term uncertainties

India Equity Strategy - Quarterly flipbook: Q4FY22-Cost inflation driving downgrades

FMCG - D2C is here to stay; omni-channel the way forward - HDFC Securities

Automobile Sector - Monthly Quick View - May'22 - Steady Performance Improvement, backed by Gradual Rural Recovery

BFSI - New normal rate cycle; brace for transmission effects - HDFC Securities

SBI Cards and Payment Services - BUY - TP Rs. 1260 - YES SECURITIES

RBI frontloads rate hike amid increased inflationary headwinds - Acuité Ratings

Monetary Policy June 2022 - Axis MF Views

RBI Monetary Policy View - Mr. Dhiraj Relli, MD & CEO, HDFC Securities

Monetary Policy - entering the red zone - Anuj Puri, ANAROCK

Mr. Murali Ramakrishnan, MD &CEO, South Indian Bank on RBI Monetary Policy

Comments on RBI's MPC Policy Jun'22 - Acuité Ratings

Views on RBI Monetary Policy - June 2022


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020