Meanwhile, in the calendar year 2024, the share price of Oil India has zoomed 209 per cent, as compared to 14 per cent rise in the BSE Sensex.
The company further plans to build a gas pipeline to connect the North Brahmaputra fields where 3 billion cubic metre (bcm) gas capacity, equivalent to FY24 gas production, is stranded. This implies that Oil India is building gas infrastructure to support 100 per cent growth in gas production.
In the past one week, the stock has gained 13 per cent after Oil India said the company expects strong production growth in the next five years, in its financial year 2023-24 annual report.
This will significantly boost exploration and production activities in the country, Oil India stated in its annual report.
With global energy consumption projected to increase by 40 per cent by 2040 and India’s oil demand expected to rise by 12 per cent in 2024, the company must scale up its production and infrastructure, it noted.
Oil India has planned to invest Rs 25,000 crore by 2040 for energy transition and net-zero goals through a wholly-owned subsidiary company being incorporated to manage its alternate energy business.
Moreover, the 50 KTPA 2G bamboo-based bio ethanol plant in Numaligarh, Assam, is at an advanced stage of commissioning through NRL’s joint venture company called Assam Bio Ethanol private limited.
As part of this initiative, a 2.2 KTPA capacity green hydrogen plant is currently being built and is expected to be commissioned by June, 2025, Oil India stated.
A strong domestic and international portfolio will be built for the same, the company said in its FY24 annual report.
“Oil India is one of our top picks within Elara oil & gas universe. We raise the target price to Rs 780 from Rs 549 on higher FY26E EV/EBITDA assumption at 10.0x (from 7.0x), led by expectations of strong production growth in the next five years. Maintain BUY. We assume long-term crude at USD 76/bbl and APM gas at USD 7.5/mmbtu (unchanged),” the brokerage firm stated in its quarterly update on the sector.
The brokerage firm also maintains a ‘Buy’ rating on the stock, with target price of Rs 766 per share.
First Published: Aug 30 2024 | 2:30 PM IST