ICICI Securities Reiterates Buy on Oil India, Revises Target to Rs 530
- ICICI Securities maintains a Buy on Oil India, revising the target price to Rs 530 while still projecting a 24 percent upside.
- Despite EPS cuts for FY26-27, the company is expected to deliver a 22 percent earnings CAGR through FY28.
- Oil India's diversified revenue mix, strong operations, and renewable investments support long-term growth potential.
ICICI Securities has reaffirmed its strong buy recommendation for Oil India Ltd. It has revised its target price downwards from Rs 580 to Rs 530, indicating a cautious outlook but still pointing to positive prospects. Despite the lower price target, the brokerage believes the stock still offers significant upside potential of around 24 percent from its current market price of Rs 430. This optimistic view is based on the company's attractive valuation levels, which suggest the stock is undervalued relative to its earnings and growth prospects. ICICI Securities also highlights Oil India’s healthy earnings growth as a key factor supporting its positive outlook.
Oil India is a mid-cap company, meaning it has a moderate size in the market. Its market capitalization stands at Rs 69,285.36 crore, and it operates mainly in the oil and gas sector. The company was founded in 1959, giving it decades of experience in exploring, producing, and selling petroleum and natural gas. Its operations include extracting crude oil and natural gas from various oil fields in India. The company also earns revenue from transportation and distribution services. Additionally, Oil India has diversified into renewable energy projects, reflecting its efforts to expand beyond traditional energy sources.
The brokerage’s earnings per share estimates, which show how much profit the company makes per share, have been revised downward for fiscal years 2026 and 2027. This likely reflects some recent challenges or market pressures. Still, ICICI Securities remains positive because it expects the company’s earnings to grow at an average rate of 22 percent annually between fiscal years 2026 and 2028. This growth forecast suggests the company might recover from short-term setbacks and expand profitably over the longer term.
Oil India’s revenue mix shows it earns from many sources, making it somewhat resilient to fluctuations in oil prices. For the year ending March 31, 2024, the company’s income comes from selling crude oil and natural gas, providing transportation services, and investing in renewable energy projects such as solar and wind power. Its diversified revenue streams help reduce dependence on volatile oil prices and support steady cash flow. The company’s ability to generate income from different areas strengthens its financial health. According to ICICI Securities, Oil India's valuation remains attractive despite recent revisions. The company's solid operational performance in recent years shows it can sustain stable production and efficient operations. The firm has also made strategic investments in renewable energy projects to balance its traditional energy business. These initiatives are seen as long-term growth drivers, adding further value to the company’s core operations. The stock is viewed as a good opportunity for investors seeking long-term value. Sector trends, such as rising energy demand and supportive government policies, are likely to benefit Oil India in the future. The company’s earnings momentum is expected to continue, making it a promising pick for investors looking ahead.
Thus, ICICI Securities maintains a positive outlook on Oil India. While they have adjusted their target price to Rs 530, they see the stock like undervalued relative to its growth prospects. Its diversified revenue base, stable operational performance, and strategic investments provide a solid foundation. The company is positioned well to benefit from ongoing sector tailwinds, making it an attractive investment option for those willing to hold long term.
