Target: ₹495
CMP: ₹427.35
Oil India’s material subsidiary, Numaligarh Refinery Ltd (NRL), was supposed to commence operations of the expanded refinery capacity (from 3 mtpa to 9 mtpa) in phases from December 2025. However, the commencement of refinery operations has been delayed.
We now expect operations to commence in Q4-FY26 and expect the refinery to gradually ramp up in succeeding quarters. Hence, we trim our FY26/27E EPS estimates by 1.6/9.1 per cent respectively.
Given that Brent crude oil prices have a direct impact on Oil India’s crude oil realisation and profitability, a $ 1 per barrel decline in Brent crude oil prices could result in Oil India’s standalone annual EPS declining about 2 per cent. Similarly, any depreciation of INR against USD bodes well for its earnings since a ₹1 depreciation in INR/USD could result in annual EPS increasing 2.6 per cent.
We believe Oil India’s standalone gas and oil production should grow at 9 per cent and 4 per cent CAGR over FY25-27E respectively.
We maintain the Buy recommendation with a revised target price of ₹495. We value Oil India’s standalone business at ₹240/sh (8x March-27E EPS) and its investments at ₹255/share.