Buy Oil India; target of Rs 230: Sharekhan

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Sharekhan's research report on Oil India

Operating profit lagged estimates due to higher-than-expected other operating expenses. Adjusted PAT was in line with estimates, at Rs. 818 crore. We do not expect upstream oil PSUs to bear fuel subsidy with a stable central government and adequate fuel subsidy provision for FY20E; we thus expect net oil realisations at $65/bbl during FY20E-FY21E.

Outlook

We maintain our Buy rating on Oil India with an unchanged SoTP based PT of Rs. 230 as valuations are discounting worst-case net oil realisation of $48/bbl; stock also offers healthy dividend yield of 5-6%.

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