Shares of Oil India Limited showed significant growth at the start of trading on Tuesday, rising by 6.53% to 483.95 rupees. The increased interest in buying shares intensified after the publication of strong financial results for the June quarter.
According to company data, its net profit after tax increased by 253%, reaching approximately 2,900 crore rupees. This amount significantly exceeded the forecast of the brokerage firm Elara Capital, which estimated the profit at 2,300 crore rupees. The main reasons for such a sharp increase in profit were higher volumes of crude oil production and sales than expected, as well as a reduction in operating costs. Nevertheless, the profit growth was partially limited by an increase in statistical levies.
Oil India's consolidated profit after tax almost doubled, amounting to about 4,000 crore rupees. Nuamaligarh Refinery Limited (NRL), located in Assam, made a significant contribution to this result due to high margins on oil refining at NRL.
Elara Capital also noted the improvement in crude oil realization indicators and production volume during the quarter as one of the key positive aspects. According to the analyst, crude oil realization grew by 49% year-on-year, reaching approximately 99 dollars per barrel. Crude oil production increased by 11%, totaling 0.95 million metric tons, which is 2% above the broker's forecast. Company management hinted that crude oil production volume could reach between 3.9 and 4.0 million metric tons by the 2027 fiscal year.
Elara Capital maintained its 'Buy' recommendation for Oil India and set the 12-month target price for the stock at 672 rupees. This suggests a potential growth of approximately 38.9% from the current level of 483.95 rupees.
However, not all brokers are as optimistic about the shares. Motilal Oswal Financial Services (MOFSL) maintained a neutral rating on Oil India, setting a target price of 485 rupees, which corresponds to the current level and indicates limited growth. According to MOFSL, the company's revenue in the first quarter of the 2027 fiscal year was 7,960 crore rupees, exceeding their expectations by 9%. Oil sales were 8% above forecast, while gas sales decreased by 11%, amounting to 0.92 million metric tons / 0.62 billion cubic meters.
According to the broker, Oil India's oil production in the quarter increased by 11%, reaching 0.95 million metric tons. Conversely, gas production decreased by 8%, amounting to 0.76 billion cubic meters. Oil realization was about 98.7 dollars per barrel, which is approximately 4% higher than MOFSL's forecast of 95.2 dollars per barrel. The company's EBITDA was 4,340 crore rupees, which is 6% higher than MOFSL's forecast and 83% higher year-on-year. In the quarter, exploration write-off expenses amounted to about 250 crore rupees, and profit after tax adjustments was about 2,870 crore rupees.
The rise in Oil India's shares on Tuesday was driven by strong quarterly results and improved operational performance. However, there is a divergence of opinions among brokers. Elara Capital maintained a 'Buy' rating with a target price of 672 rupees, while MOFSL adopted a neutral stance with a target price of 485 rupees. The future behavior of the shares will depend on the current pace of crude oil production, crude oil realization, gas production, and refining margin at NRL.
