OIL INDIA
Reco price: Rs 1,104,
Target price: Rs 1,525
Oil India Limited (OIL) has been delivering impressive performance on core operating parameters such as production growth, coupled with efficient operations, resulting in low finding, development and lifting costs. The company is in advance talks for acquiring an oil-producing asset in Africa. It is likely to give a non-binding agreement for the same in the next two-three months. The estimated acquisition cost is Rs 5,000-6,000 crore, translating into EV/boe of $4.8-5.8. The same compares favourably to the opportunity cost. Key catalysts affecting the stock price continue to be subsidy sharing and outlook with regards to deployment of a significant cash balance. The stock is currently trading at 7.3 times FY13 estimated EPS. Maintain accumulate
Prabhudas Lilladhar Research
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