Oil India shares jump after strong Q1 earnings; check fresh target prices

Shares of Oil India Ltd surged 6.53 per cent in Tuesday's early trade to hit a high of Rs 483.95 after the state-owned company reported a sharp rise in its June quarter earnings. The company's standalone profit after tax (PAT) soared 253 per cent year-on-year (YoY) to Rs 2,900 crore, beating Elara Capital's estimate of Rs 2,300 crore.

Elara Capital said the earnings beat was supported by stronger-than-expected production and sales volumes, lower other operating expenses and higher other income, partly offset by higher statutory levies.

"Consolidated PAT almost doubled YoY to Rs 4,000 crore, aided by exceptionally strong refining margins at NRL (Numaligarh Refinery Ltd)," the domestic brokerage stated. Oil India holds a majority stake in Assam's NRL.

The brokerage also highlighted an improvement in crude realisation and production during the quarter.

"Crude realisation rose 49 per cent YoY to $99/bbl, and crude output rose 11 per cent YoY to 0.95 MMT, 2 per cent ahead of our estimate. Management indicated crude output could reach at least ~3.9-4.0 MMT in FY27, providing potential upside if the current production run-rate sustains," Elara said.

Elara Capital retained its 'Buy' rating on Oil India shares with an unchanged 12-month target price of Rs 672. Based on the stock's early-trade high of Rs 483.95, the target implies a potential upside of around 38.86 per cent.

Meanwhile, Motilal Oswal Financial Services Ltd (MOFSL) reiterated its 'Neutral' rating on Oil India, with a target price of Rs 485, suggesting limited upside from current levels.

"Oil India's Q1 FY27 revenue stood 9 per cent above our estimate at Rs 7,960 crore. Oil sales came in 8 per cent above our estimate, while gas sales were 11 per cent below our estimate at 0.92 MMT/0.62 bcm. Oil production increased 11 per cent YoY to 0.95 MMT. Gas production declined 8 per cent YoY to 0.76 bcm," the brokerage stated.

MOFSL also noted that oil realisation and EBITDA were above its estimates.

"Oil realisation was $98.7/bbl (4 per cent above our estimate of $95.2/bbl). EBITDA was 6 per cent above our estimate at Rs 4,340 crore (+83 per cent YoY). Exploration cost write-offs stood at Rs 250 crore. Adjusted PAT was 12 per cent above our estimate at Rs 2,870 crore," MOFSL added.