1:2 Bonus: Low PE Maharatna PSU Stock Oil India Is Recommended To BUY; 25% Dividend Record Date On August 30

Prabhudas Lilladher has recommended BUY on Maharatna PSU oil and gas stock, Oil India which is going to reward investors with dividend payout of Rs 2.50 per share for FY24 in the coming days. The company has fixed the record date. PL likes Oil India shares as the PSU is on the track to achieve significant volume growth.

As per Prabhudas Lilladher, in FY24, Oil India's oil and gas production from nominated fields stood at 3.3mmt (up 6% YoY) and 3.1bcm (up 1.6% YoY), respectively. Gas production has been rising steadily since Oct'23 and increased 8% YoY as of Apr-Jun'24.

Meanwhile, in Q1FY25, the brokerage highlighted that oil production grew by 2.8/6.2% QoQ/YoY while gas production grew by 1.5/8% QoQ/YoY. The company aspires to reach 4mmt of oil and 5bcm of gas by FY26E. Growth in oil production
would be aided by drilling 75 wells across 5 of its fields.

Thereby, Prabhudas' note said, "We build in 8% volume CAGR over FY24-26E to 3.9mmt. Gas offtake being dependent on NRL expansion and IGGL pipeline commencement, we build in a conservative volume growth of 16% CAGR over FY24-26E to 4.3bcm."

On the valuation, the brokerage continues to be positive on the stock with a 'Buy' rating and a TP of Rs722 based on 11x FY26 standalone adj EPS and adding the value of investments.