OIL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.2

📊 Core Financials Overview

Profitability

PAT dropped from ₹1,591 Cr to ₹813 Cr — a –44.5% quarterly decline, reflecting commodity price volatility.

EPS: ₹33.6 — strong earnings base for its price range.

Return Metrics

ROCE: 15.2% and ROE: 13.5% — solid, indicating efficient capital deployment.

Debt Profile

Debt-to-equity: 0.28 — moderate and manageable for a capital-intensive sector.

Dividend Yield: 2.88% — attractive for income-seeking investors.

Cash Flow: Not explicitly stated, but consistent profitability and moderate debt suggest healthy operating cash flows.

💹 Valuation Indicators

Metric Value Commentary

P/E Ratio 11.9 Fairly valued vs. industry average of 11.6 — slightly above peers.

P/B Ratio ~1.43 Reasonable given asset-heavy model and ROE.

PEG Ratio 0.74 Attractive — suggests undervaluation relative to growth.

Intrinsic Value Estimated near ₹420–₹440 Current price of ₹399 is slightly below fair value — favorable entry point.

🧠 Business Model & Competitive Advantage

Oil India Ltd. (OIL) is India’s second-largest national oil and gas company, operating primarily in upstream exploration and production

Core Operations

Crude oil and natural gas exploration, production, and transportation.

Operates in Assam, Arunachal Pradesh, Rajasthan, and offshore blocks.

Revenue Streams

Sale of crude oil and natural gas to refiners and utilities.

Pipeline transportation and stake in Numaligarh Refinery Ltd. (NRL).

Strategic Strengths

Government backing ensures policy stability and strategic importance.

Strong asset base with proven reserves and exploration rights.

Diversification into renewables and overseas assets via OIL Videsh.

Its competitive edge lies in resource ownership, low-cost production, and strategic infrastructure, making it a resilient player in India’s energy ecosystem.

📈 Technical & Sentiment Signals

RSI: 45.1 — approaching oversold zone, potential for rebound.

MACD: Negative — short-term bearish momentum.

Volume: Above average — suggests active investor interest.

DMA 50/200: Price below both — short-term weakness, long-term support near ₹428.

🎯 Entry Zone & Long-Term Guidance

Suggested Entry Zone: ₹380–₹400 — near current levels and below DMA resistance.

Long-Term View: OIL is a fundamentally strong PSU with stable cash flows, moderate debt, and attractive dividend yield. Suitable for long-term holding, especially for investors seeking exposure to India’s upstream energy sector and commodity-linked returns.

You can explore this strategic analysis of India’s oil sector or this academic paper on competitive advantage in oil & gas for deeper insights. Let me know if you'd like a comparison with ONGC or GAIL.

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