Shares of state-owned Oil India Ltd. experienced a significant jump in early trade on Tuesday, climbing 6.53 percent to hit a high of Rs 483.95. The surge followed the company's announcement of exceptionally strong June quarter (Q1 FY27) earnings, significantly surpassing market expectations.
Strong Q1 Performance Details
Oil India reported a standalone profit after tax (PAT) of Rs 2,900 crore for the first quarter, marking a remarkable 253 percent increase year-on-year. This figure comfortably beat Elara Capital's estimate of Rs 2,300 crore. The robust earnings were attributed to several factors, including stronger-than-expected production and sales volumes, reduced operating expenses, and higher other income, partially offset by increased statutory levies.
The company's consolidated PAT nearly doubled year-on-year to Rs 4,000 crore, primarily bolstered by exceptionally strong refining margins from its majority-owned subsidiary, Numaligarh Refinery Ltd. (NRL) in Assam.
During the quarter, crude realization also saw a substantial improvement, rising 49 percent year-on-year to $99 per barrel. Crude output increased by 11 percent year-on-year, reaching 0.95 MMT, which was 2 percent ahead of Elara Capital's projections. Management indicated a promising outlook, suggesting crude output could reach approximately 3.9-4.0 MMT by FY27 if the current production run-rate is sustained.
Analyst Ratings and Price Targets
Following the impressive earnings report, several brokerages reaffirmed their ratings and adjusted target prices for Oil India shares.
- Elara Capital: The brokerage maintained its 'Buy' rating on Oil India, keeping its 12-month target price unchanged at Rs 672. This target implies a potential upside of approximately 38.86 percent from the stock's early-trade high.
- Motilal Oswal Financial Services Ltd. (MOFSL): MOFSL reiterated its 'Neutral' rating for Oil India, setting a target price of Rs 485. This suggests limited upside potential from current levels.
MOFSL's analysis highlighted that Oil India's Q1 FY27 revenue stood at Rs 7,960 crore, 9 percent above their estimate. Oil sales also exceeded their estimate by 8 percent, while gas sales were 11 percent below at 0.62 bcm. Oil production grew 11 percent year-on-year to 0.95 MMT, but gas production declined 8 percent year-on-year to 0.76 bcm.
Furthermore, MOFSL noted that oil realization at $98.7/bbl was 4 percent above their estimate, and EBITDA came in at Rs 4,340 crore, an 83 percent year-on-year increase and 6 percent above their forecast. Adjusted PAT, according to MOFSL, was Rs 2,870 crore, surpassing their estimate by 12 percent.