Shares of Oil India Ltd. (OIL) saw a notable gain of nearly 3% in Tuesday's trading, reaching an intraday high of ₹496.30 on the BSE. This surge follows HDFC Securities reaffirming its 'Buy' recommendation for the state-owned oil and gas exploration and production company.
HDFC Securities Raises Target Price for Oil India
In its latest research note, HDFC Securities significantly revised its target price for Oil India shares to ₹639 per share. This new target suggests a substantial upside potential of approximately 29% from current levels. The brokerage attributes this optimistic outlook primarily to two factors: anticipated oil and gas production growth at a 3% Compound Annual Growth Rate (CAGR) from FY26 to FY28, and a sustained higher crude oil price realization.
Strong Earnings Estimates and Favorable Market Conditions
HDFC Securities has also upwardly revised its earnings per share (EPS) estimates for Oil India, increasing projections for FY27 by 24.9% and for FY28 by 14.9%. This positive adjustment reflects the brokerage's confidence in continued strong crude oil price realizations and a favorable rupee-dollar exchange rate, both of which are expected to bolster the company's financial performance.
The company's robust performance in the fourth quarter of FY26 further supports this positive sentiment. Oil India reported standalone EBITDA of ₹18.21 billion, which, despite an 8.2% year-over-year decline, marked a significant 39.1% quarter-over-quarter increase and surpassed analyst estimates. Similarly, its Adjusted Profit After Tax (APAT) stood at ₹17.9 billion, climbing 12.4% year-over-year and an impressive 121.4% quarter-over-quarter, also exceeding expectations. These stronger-than-anticipated results were largely driven by higher-than-expected realization rates and other income sources.
Valuation and Subsidiary Performance
HDFC Securities values Oil India’s standalone business at ₹368 per share, based on a 7x March 2027E EPS. Additionally, its investments are valued at ₹271 per share, contributing to the overall target price. The report also highlighted the performance of Numaligarh Refinery Ltd. (NRL), a subsidiary, which reported a Gross Refining Margin (GRM) of USD21.17 per barrel for the quarter. Excise benefits totaling ₹30 billion for FY26 are expected to continue even after the refinery's capacity expands to 9 million metric tonnes per annum (mmtpa).