OIL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.0

📊 Financial Overview

• Profitability: PAT at ₹813 Cr, down from ₹1,591 Cr QoQ; EPS at ₹33.6
• Margins: ROCE at 15.2%, ROE at 13.5% — solid efficiency for an energy PSU
• Debt Profile: Debt-to-equity ratio of 0.28 — moderate leverage, manageable risk
• Dividend Yield: 2.65% — attractive for income-focused investors

📈 Valuation Metrics

• P/E Ratio: 12.9 — slightly below industry average of 14.2
• P/B Ratio: ~1.56 — fair valuation relative to book value ₹279
• PEG Ratio: 0.80 — suggests reasonable valuation relative to growth
• Intrinsic Value: Estimated around ₹450–₹470 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: Oil India Ltd is a government-owned upstream oil and gas company engaged in exploration, production, and transportation
• Moat: Strategic reserves, government backing, and integrated operations across crude, gas, and pipeline infrastructure
• Growth Drivers: Domestic energy demand, global oil price recovery, and expansion in gas infrastructure

📌 Entry Zone Recommendation

• Suggested Entry: ₹410–₹430 — near DMA50 and below intrinsic value
• Technical Indicators: RSI at 62.3 (neutral), MACD positive — stable momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; ideal for dividend and value investors
• Monitor global oil prices and domestic policy changes

✅ Positive

• Strong dividend yield and fair valuation
• Consistent EPS and solid return ratios
• DII holding increased by 0.80%
• PEG ratio indicates reasonable growth potential

⚠️ Limitation

• QoQ PAT decline of 44.5%
• FII holding declined by 0.60%
• Volume below weekly average — signals reduced short-term interest

📰 Company Negative News

• Q2 FY26 earnings declined due to lower crude realizations and higher operating costs

🌟 Company Positive News

• Expansion in gas pipeline infrastructure and new exploration blocks expected to drive future growth

🏭 Industry

• Energy sector P/E at 14.2 — Oil India trades slightly below average
• Sector driven by global oil dynamics, energy security, and infrastructure investment

🧾 Conclusion

• Oil India is a fundamentally sound PSU with attractive dividend yield and strategic importance in India’s energy landscape
• Accumulate near support zones for long-term value; monitor earnings stability and global oil trends