Agra Investment：Oil India shares strain following Q2 Results; Should you buy, hold or sell the stock？

The share price of State-run explorer Oil India tanked 4.28% to Rs 297.30 a day after the company reported a drop of 80% in the second quarter of FY24 as the company set aside Rs 2,363 crore for an ongoing litigationAgra Investment. The company’s profit for Q2FY24 fell to Rs 325 crore compared to Rs 1,721 crore. Oil India took on charges related to an ongoing litigation over a service tax demand raised in the states of Assam, Arunachal Pradesh and Rajasthan, reported Reuters.

’s share price dropped 0.10% in the last five days and 2.65% in the last one month, while it gained 20% in the six months and a whopping 41.06% year to date.

“However, PAT was sharply lower at Rs 330 crore vsSimla Wealth Management. JMFe/consensus of Rs 1980/ Rs 1430 crore due to one-off provision of Rs 2360 crore which Oil India has conservatively created in respect of disputed service tax/ on royalty from Mar’16 till Sep’23 along with interest; this is similar to the provision earlier created by in 4QFY23New Delhi Wealth Management. Further, NRL’s 2QFY24 GRM was largely in line at USD16/bbl; although, NRL’s EBITDA was lower at Rs 1090 crore in 2QFY24. Consolidated EBITDA was at Rs 3520 crore and consolidated PAT was at Rs 420 crore. The board approved an interim dividend of Rs 3.5/share for 1HFY24 (or 21% pay-out of 1HFY24 consolidated EPS of Rs 17/share). We maintain ‘Buy’ (revised Target Price of Rs 355) as the stock is a strong dividend play and also because CMP is discounting USD 55-60/bbl of net crude realisation while our Target Price is based on FY25 net crude realisation of USD 65/bblKolkata Stocks. At CMP, Oil India is trading at 5.5x FY25E EPS and 0.7x FY25E BV (vs. 3-year avg of ~0.8x).”

“The stock is trading in a narrow range of 10 points between 297 to 307. Immediate Support is looking to be at around 300, below which the stock can drift down towards 297 and 295 levels. However, if the stock goes above 308, it has potential to touch 315 and 317.50 levels in the coming few days. If the stock manages to above 317.50, momentum will be extremely strong pushing the stock price towards 340 and 380 in near term.”

New Delhi Stock Exchange