MOSL: OIL INDIA (Buy)-Baghjan field is back on its feet – stable outlook ahead
OIL INDIA: Baghjan field is back on its feet – stable outlook ahead
(OINL IN, Mkt Cap USD2.4b, CMP INR166, TP INR200, 20% Upside, Buy)
- OINL reported volume is in line with our estimate, while lower opex led to the EBITDA beat.
- The management said majority of the gas production is accruing from the Baghjan field currently as the fire-related issues are resolved. It is targeting ~5mmscmd of gas from this field (up from the current production of 1.6-1.8mmscmd) over the next 3-5 years. It has started working on three more drilling wells, while one well was completed recently in the Baghjan field.
- Brent prices have started cooling off from its peak (of USD75/bbl in Jul'21 to ~USD70/bbl). We expect it to return to normal levels of USD60-65/bbl as OPEC+ gradually increase its oil production (by 0.4mnbopd per month starting Aug'21).
- We forecast a FY22E/FY23E Brent price of USD63/USD60 per bbl, considering the easing of the current 5.8mnbopd of production cuts. The stock trades at a 25% discount to its one-year forward long term P/E average of 8.4x. We maintain our Buy rating.
Oil India is a fully integrated upstream petroleum company based in India. Co. is engaged in the exploration, development and production of crude oil and natural gas, transportation of crude oil and production of Liquid Petroleum Gas (LPG). Co. also provides various Exploration & Production (E&P) related services and holds an interest in the Numaligarh Refinery. Co. conducts the majority of its activities in North East India as well as Rajasthan. Additionally, Co.'s is active in Ganga Valley and Mahanadi and has participating interests in Mahanadi Offshore, Mumbai Deepwater, Krishna Godavari Deepwater, etc. as well as various overseas projects in Libya, Gabon, U.S.A., Nigeria and Sudan.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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