Accumulate Oil India; target of Rs 414: Prabhudas Lilladher

OINL reported Q2FY17 with EBITDA of Rs 8.4bn (‐7%YoY, ‐3%QoQ) (PLe: Rs 8.8bn) and PAT of Rs 5.8bn (‐14%YoY, +17%QoQ) (PLe: Rs 5.2bn). OINL’s gas revenues at Rs 3.7bn (‐22%YoY, +2%QoQ) continue to drift due to lower realisation, post cut in domestic prices, despite higher volumes from commissioning of the BCPL plant. Crude oil revenues were at Rs 17.2bn (‐1%YoY, +7%QoQ), due to weak crude prices which continue to remain range‐bound. Any movement will be contingent on production cuts in the upcoming OPEC meetings. We maintain our earnings for FY17/18E. OINL stock has underperformed broader index led by benign crude price outlook. Also, volumes continue to remain uninspiring, with crude oil production volumes down 5.1% CAGR over FY12‐16, while natural gas production volumes were up 1.9% CAGR over the same period. We maintain ‘Accumulate’ with a price target of Rs 414 (Rs 377 earlier) based on 11x FY17E (10x earlier).