Over 70% upside! Here's why brokerages are bullish on this midcap stock post strong Q1 show

Shares of Oil India have fallen over 38.5 per cent from their recent June highs putting the stock firmly in a bear grip. The scrip hit a 52-week low of Rs 159.05 on August 12, 2021, and a 52-week high of Rs 306 on June 9, 2022.

With a market capitalisation of over Rs 20,000 crore, the shares are trading higher than 10, 20-EMA but below 5, 50, 100, and 200-EMA. Brokerages maintained their bullish stance on the stock after the company posted its earnings for the quarter ended June 2022.

ICICI Securities, in its recent report, has maintained a 'Buy' call on the stock with a target price of Rs 328, signalling a potential upside of 74 per cent on the counter from its previous close of Rs 187.9 on Thursday. It believes that the risk-reward is compelling at current levels, given: steady production growth, upside risk to our target price, strong GRM estimates, and attractive valuations.

"We believe that the group earnings may have peaked out for the near term, with our FY23E-FY24E estimates factoring in 1) moderation in NRL GRMs, 2) moderation in Brent crude price to US$90-95/bbl vs >US$110/bbl currently, and 3) net realisations capped at US$75/bbl thanks to the new additional duties imposed by the government," it said..

"We do factor in moderation in earnings from the record highs seen in FY22 with a sharply lower EPS estimate for FY24E vs FY22 (FY23E/FY24E EPS cut by 15%). However, we note this is still a robust 23% higher than the FY21 EPS and, even on these earnings, valuations of just 5.9x FY24E EPS and 4.6x EV/EBITDA are extremely attractive," it added.

HDFC Securities also has a 'Buy' call on Oil India with a target price of Rs 255. "Our 'Buy' recommendation on Oil India with a target price of Rs 255 is premised on (1) increase in crude price realisation and improvement in domestic gas price realisation, '' the brokerage said. Q1FY23 revenue/EBITDA/APAT stood at Rs 60/26/16bn, below our estimate, impacted by higher-than-expected provisions that resulted in higher other expenses and below estimated other income, it said.

According to Trendlyne, the consensus recommendation from 16 analysts for Oil India is Buy. Also, the earnings per share (EPS) is expected to grow by 32.7% in FY23.

The nation's second-largest state explorer reported a tripling of its net profit in the June quarter on record oil and gas price realisation. Its net profit was Rs 1,555.46 crore, or Rs 14.34 per share, in April-June compared to Rs 507.94 crore, or Rs 4.68 a share, in the same period a year back, the company said in a statement.

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