Company Overview
Oil India Limited (OIL) is a government-owned company in India, managed by the Ministry of Petroleum and Natural Gas. It’s the second-largest oil and gas company in India and has been involved in the industry since 1889. OIL is an inclusive player in the oil and gas sector, from exploration to production. They also produce Liquefied Petroleum Gas (LPG) and transport crude oil and refined products through pipelines. They operate in various states in India and offshore regions. OIL has a range of facilities for tasks like seismic work, data acquisition, drilling, and more.
Why should we invest in OIL?
OIL is an important player with large oil reserves. They operate in several areas in India and have interests in various blocks. They’ve been steadily adding to their reserves, and they also have overseas oil and gas reserves. In the last fiscal year, they achieved record natural gas production, and their revenue is expected to grow strongly due to exploration and increased gas output.
Healthy infrastructure is spread across different regions. The oil and gas industry requires large infrastructure investment, and OIL has a strong advantage with its long history and expertise. They have facilities for production, pipelines, drilling, and storage in key oil and gas regions. They’ve been actively exploring new areas as well.
Valuation and Outlook
Due to tighter oil supply from Saudi Arabia and Russia, Brent crude prices are strong, which is good for companies involved in exploration and production like OIL. OIL has expanded its operations into refining and petrochemicals, positioning itself across the entire oil and gas value chain. It’s strategically important for India’s energy sector, especially in the northeast region. OIL is expected to grow due to its experienced management, importance in the oil and gas sector, and the acquisition of a controlling stake in Numaligarh Refinery Limited. With a strong operational performance, solid infrastructure, and a healthy financial position, OIL is likely to see decent growth. Therefore, we recommend buying the stock, and we’ve valued it at INR 349 with a 12-month investment horizon, which represents a 17% upside from the current market price.
Key Takeaways:
- OIL is an inclusive player in the oil and gas sector, from exploration to production
- OIL is an important player with large oil reserves.
- Healthy infrastructure is spread across different regions
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