Oil India shares jump over 5%. What made Emkay upgrade the stock after Q1 results

Shares of Oil India jumped over 5% to Rs 478.80 apiece on the BSE on Tuesday after multiple brokerages turned bullish on the stock. Domestic brokerage firm Emkay Global upgraded the Indian PSU company’s rating to Buy, from Add, retaining the target price of Rs 575.

Elara Capital maintained its Buy rating on the stock, on higher production guidance and improving gas evacuation visibility, with a target price of Rs 672, implying an upside of 48%. Nomura and Motilal Oswal retained their neutral rating, with a target price of Rs 500 and Rs 485, respectively.

The bullish ratings from the brokers come in the backdrop of strong earnings reported by the company for Q1.

Oil India registered its highest-ever standalone profit after tax at Rs 2,870 crore in Q1FY27 as compared to Rs 813 crore in the corresponding quarter of the previous year, with a 2.5 times YoY growth, supported by 11% growth in crude oil production and crude oil price realisation of $98.73/bbl in Q1FY27.

Oil India’s material subsidiary Numaligarh Refinery Limited (NRL) achieved a 167% growth in PAT, rising to Rs 1,305 crore in Q1FY27 from Rs 488 crore in Q1FY26, with a GRM of $35.95/bbl and Distillate Yield of 87.58%.

Why Emkay Global upgraded to Buy

In terms of natural gas production, evacuation bottlenecks are expected to ease by CY27-end, enabling 3.5-4mmscmd of incremental volumes from Q1 CY28, while expansion of its subsidiary (NRL) would add ~1.5 mmscmd by Q3 FY28, according to the brokerage.

NRL reported robust GRMs despite windfall taxes and lower excise duty, the brokerage stated in its report. The expansion is on track for completion by Mar-27, with utilisation to ramp up to 75% by FY28-end. Oil India targets 100 wells in FY27, with drilling to rise 10% annually, with increasing focus on deepwater.The brokerage factors in $85/80 crude in FY27/28E, as material decline in crude prices remains a key risk.

The Crude Factor

Crude remains the earnings engine according to Elara Capital, as crude realisation rose 49% year-on-year (YoY) to $99/bbl, and crude output rose 11% YoY to 0.95MMT, 2% ahead of the brokerage’s estimate. Management indicated crude output could reach at least ~3.9 -4.0MMT in FY27, providing potential upside if the current production run-rate sustains. The brokerage expects gas infrastructure to drive future volume, along with NRL capacity expansion.

What other brokerages said

Implying a 10.4% upside, Nomura expects a softer oil price outlook over the medium to long term. The brokerage raised its FY27F/28F standalone EBITDA estimates by 6%/5%, as it increased its crude oil production volume estimates by ~6%, while realizations are also revised up slightly. The brokerage raised GRM estimates for NRL as the refining upcycle might last longer than it had earlier expected, and continues to expect excise duty cuts of Rs 10/litre taken in March 2026 to be rolled back by the end of FY27F, which should benefit NRL’s earnings (NRL gets back 50% excise duty on petrol and diesel) from FY28F onwards. Nomura expects a gradual ramp-up of NRL refining throughput to 7.8mn tons (87% utilisation) by FY29F.

Over the past few quarters, Oil India has struggled to ramp up production/sales, with limited YoY growth, according to Motilal Oswal. Increased exploration intensity (which is key to building a robust development pipeline) is likely to be accompanied by higher dry-well write-offs, which could weigh on earnings, the brokerage stated in its note.

The benefits of a higher proportion of gas from new wells are likely to be largely offset by subdued gas realizations amid a weaker crude oil price outlook, it further added. The NRL refinery segment is expected to achieve 75% capacity utilization by FY28’end. Motilal Oswal models a 5.4%/8.1% CAGR for oil and gas production volumes over FY26-28.

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