OIL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.1

📊 Financials: Oil India shows healthy fundamentals with ROE at 13.5% and ROCE at 15.2%, reflecting decent efficiency. Debt-to-equity ratio is low at 0.28, indicating a manageable balance sheet. EPS stands at ₹28.7, supported by quarterly PAT of ₹1,044 Cr. compared to ₹813 Cr. previously, though year-on-year profit variation shows -43.1%. Dividend yield of 2.84% provides moderate income support.

💹 Valuation: Current P/E of 14.1 is below industry average of 18.6, suggesting undervaluation. Book value of ₹298 gives a P/B ratio of ~1.36, which is reasonable relative to fundamentals. PEG ratio of 0.88 indicates fair growth-adjusted valuation. Intrinsic value appears higher than current price, offering margin of safety.

⛽ Business Model: Oil India operates in oil and gas exploration and production, benefiting from government backing and strategic importance in India’s energy sector. Its competitive advantage lies in scale, integrated operations, and long-term contracts, though global crude price volatility impacts profitability.

📈 Entry Zone: Current price ₹405 is near support at ₹322 and below DMA 50 (₹415) and DMA 200 (₹423). Entry zone recommended between ₹390–410 for accumulation. Long-term holding is favorable given undervaluation, dividend support, and sectoral demand, though investors should monitor crude price cycles.

Positive

• 📌 Strong dividend yield (2.84%) provides steady income
• 📌 Low debt-to-equity ratio (0.28) ensures financial stability
• 📌 EPS of ₹28.7 reflects consistent profitability
• 📌 P/E of 14.1 below industry average (18.6), showing undervaluation
• 📌 Quarterly PAT improved sequentially from ₹813 Cr. to ₹1,044 Cr.
• 📌 52-week index gain of 48.1% highlights sectoral strength

Limitation

• ⚠️ Quarterly profit variation (-43.1%) reflects earnings volatility
• ⚠️ RSI at 35.9 indicates oversold momentum
• ⚠️ Current price below DMA 50 and DMA 200, showing weak technical trend
• ⚠️ MACD (-6.41) reflects bearish short-term momentum

Company Negative News

• 📉 Decline in FII holding (-0.60%) reflects reduced foreign investor confidence
• 📉 Profit variation (-43.1%) highlights earnings pressure

Company Positive News

• 📈 Quarterly PAT improved sequentially from ₹813 Cr. to ₹1,044 Cr.
• 📈 Increase in DII holding (+0.80%) shows domestic institutional support
• 📈 Strong dividend payout enhances shareholder value

Industry

• ⛽ Oil & gas sector supported by energy demand and government backing
• ⛽ Industry P/E at 18.6 highlights Oil India’s undervaluation compared to peers

Conclusion

✅ Oil India is fundamentally strong with undervaluation, low debt, and decent dividend yield. Entry around ₹390–410 offers margin of safety. Long-term holding is recommended for investors seeking stable returns in the energy sector, though monitoring crude price cycles and earnings volatility is essential.

Would you like me to extend this into a peer benchmarking overlay comparing Oil India with ONGC and other oil & gas companies, or a basket scan to identify compounding opportunities across the energy sector?