PL Capital Maintains ‘Buy’ on Oil India, Targets ₹649 as PAT Jumps 30% QoQ; Volume Growth Key to Re-Rating

“We re-iterate our ‘BUY’ rating on Oil India, valuing the standalone business at 9x FY27 adjusted EPS and adding value of investment in NRL to arrive at our target price of ₹649,” states our latest report dated May 28, 2025.

Mumbai| 29th May – Despite a modest uptick in revenue and a dip in margins, Oil India Ltd (OIL) posted a robust 30% sequential rise in profit after tax (PAT) for Q4FY25. Supported by steady oil realizations, lower depreciation, and a sharp increase in other income, the bottom-line performance surpassed expectations and reaffirms the company’s trajectory towards earnings recovery.

The outlook remains constructive as volume growth, the upcoming NRL expansion, and strategic capex plans are expected to drive medium-term re-rating.

Q4FY25 Highlights: Solid Bottom Line Despite Flat Revenue

Oil India’s net revenue for Q4FY25 stood at ₹5,520 crore, rising 5.3% QoQ on the back of improved oil sales and realizations. Crude oil realization rose slightly to US$74.5 per barrel, up from US$73.8/bbl in the previous quarter, while gas realization held steady at US$6.5/mmBtu.

However, EBITDA declined by 7% QoQ to ₹1,980 crore, impacted by higher other expenses. In contrast, PAT surged to ₹1,590 crore, a 30.2% QoQ rise, due to reduced depreciation charges, lower interest costs, and a sharp 252% rise in other income.

“Despite higher oil realization and flat gas realization combined with growth in oil sales, sales grew by 2.8% QoQ. However, higher other expenditure led to a 7% QoQ decline in EBITDA.” Noted the report

Snapshot: Key Financials

Values in INR crores

5 Key Management Insights

1. FY28 Production Target Reiterated
   Oil India continues to aim for 4 million metric tonnes (mmt) of oil and 5 billion cubic metres (bcm) of gas by FY28. PL Capital estimates 3.9mmt of oil and 4.3bcm of gas by FY27, up from 3.4mmt and 3.3bcm in FY25.
2. NRL Expansion on Track
   The ₹30,000 crore expansion of Numaligarh Refinery (NRL) is expected to begin commissioning by December 2025. Crude pipelines from Paradip and product pipeline upgrades (to 5.5mmtpa) are expected to complete on schedule.
3. Robust Capex Plan
   Oil India incurred ₹8,600 crore capex in FY25 and has guided for ₹7,000 crore in FY26. In addition, ₹9,000 crore capex is allocated for NRL in FY26, with no cost overruns anticipated.
4. Crude Sourcing & Export Strategy
   Crude supply for NRL will be managed by BPCL. Management expects that loss of excise duty on exports will be offset by lower product placement costs and premium pricing in export markets.
5. Gas Output to Nearly Double
   Current gas production at 7mmscmd is expected to rise to 13mmscmd in the long run, supported by the commissioning of Namrup fertilizer plants and improved pipeline connectivity.

Bottom Line

Oil India is well-positioned for structural growth, supported by volume ramp-up, downstream capacity expansion, and disciplined capex execution. With visibility on production and profitability improvements, earnings are expected to accelerate over FY26–27.

At just 6.7x FY27E P/E, valuations are compelling. PL Capital values the standalone business at ₹514/share, and estimates an additional ₹60/share from NRL after applying a 25% holding company discount, arriving at a target price of ₹649.

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