Oil India: Optimism on gas prices, subsidies


These larger benefits, added to other favourable factors, outweigh near-term concerns, causing analysts to be bullish on the stock

Oil India Ltd (OIL), the upstream major in the sector, has seen its stock under pressure for quite a while, with concerns on production volumes, uncertainty over subsidy burden and, recently, the government’s plan of selling its stake in Indian Oil Corporation to the company. While the concerns might continue to exert pressure in the near term, there are bigger gains likely to accrue to OIL that are not reflecting in market sentiment, say analysts.

These include gas price rise, continued diesel price increases (reducing the subsidy burden) and reserve upgradation at its Mozambique assets. Given the analysts’ target price of Rs 575-600, there is a potential upside of 19-24 per cent from the current Rs 482.

 

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SOURCE: http://www.business-standard.com/

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