Management is positive on Oil india

The management anticipates that the production of oil and gas will grow steadily at an annual rate of 8% to 26% between FY2024E and FY2026E, mainly due to increased drilling activity. As a result, we have adjusted our earnings estimates for the period FY2024 to FY2026 upwards by 3% to 16%, considering the expected rise in oil and gas output and reduced operating costs. With stable oil and gas prices and an anticipated recovery in production, we forecast a Compound Annual Growth Rate (CAGR) of 11% in standalone earnings from FY2024E to FY2026E. Additionally, the earnings of the consolidated company will benefit from the expansion of NRL. At a valuation of 6.8 times the estimated earnings per share for FY2026, which also accounts for NRL’s earnings, the stock appears reasonably priced, offering a good dividend yield of 3% to 4%. Furthermore, if we include the additional earnings from the NRL expansion, the valuation could become even more attractive. Looking ahead, a potential Initial Public Offering (IPO) for NRL could unlock further value for investors.

The overall rating of Oil India is 4.2, with Work-Life balance being rated at the top and given a rating of 4.1.