Oil India stock extends rally, up 17% in 2 days; market cap nears Rs 1 trn

In the past one month, the stock price of OIL has appreciated by 36 per cent, while, thus far in the calendar year 2024, the stock has zoomed 141 per cent.

Shares of Oil India (OIL) hit a new high of Rs 598.50, surging nearly 9 per cent on the BSE in Friday’s intra-day trade on the back of two-fold jump in trading volumes. In the past two trading sessions, the stock of upstream company has rallied 17 per cent.

In the past one month, the market price of OIL has appreciated by 36 per cent. Thus far in the calendar year 2024, the stock has zoomed 141 per cent. OIL turned ex-date for 1:2 bonus issues on July 2.

A sharp up move in the stock price has seen the market capitalisaton of OIL inch towards Rs 1 trillion mark. At 02:28 pm; with Rs 95,189 crore market cap, OIL was trading 6 per cent higher at Rs 586, as compared to 1 per cent rise on the BSE Sensex. A combined 19.32 million shares representing 2.7 per cent of free float equity of the company changed hands on the NSE and BSE.

 

According to reports, Morgan Stanley has maintained its "overweight" rating on OIL and raised its price target to Rs 663 from Rs 496 earlier. The overseas brokerage firm said that it turned more bullish as the company's gas production has doubled in recent times.

In the month of May, OIL and Numaligarh Refinery Limited (NRL), the company’s material subsidiary signed a new long-term Definitive Agreement for the transportation of additional petroleum products through OIL’s Numaligarh-Siliguri Product Pipeline (NSPL) following the commissioning of NRL expansion project.

Currently, OIL evacuates 1.72 million metric tons per annum (MMTPA) of petroleum products through NSPL, delivering to the marketing terminal of NRL at Siliguri. Since its commissioning in 2008-09, the NSPL has served as the lifeline for evacuating products from NRL’s Refinery to Siliguri Marketing Terminal for onward distribution to various demand centres in eastern and northern India. In line with Hydrocarbon Vision 2030 for Northeast India, NRL is executing an NRL expansion project to enhance capacity from 3 to 9 MMTPA. 

OIL would benefit from completion of the Guwahati-Baruani gas pipeline in H2FY25, which would unlock gas production growth potential from 80 per cent undeveloped gas reserves, said analysts at Elara Capital.

Production growth guidance remains robust, with drilling activity and development wells in old areas contributing to this growth. OIL is also applying new technologies to grow production. Capacity expansion for NRL (from 3mmt to 9mmt) would also be completed by December 2025, which would drive further growth. The company is a unique play to benefit from the strong multi-year uptrend in both upstream and refining, according to Motilal Oswal Financial Services.

Analysts at ICICI Securities raised EPS estimates for FY25/26E by 24/22%, to factor in stronger production visibility as guided by the management and recent quarterly performance and higher estimates for NRL, with greater visibility on expansion timelines. Led by sharply higher production growth and visibility on NRL throughput, the prospects remain strong over the next couple of years, the brokerage firm said in Q4FY24 result update.