Oil India rallies over 20% in 2 days—stock hits record high price of ₹406.40

Shares of Oil India have gained more than 20% in the last two trading sessions, with the scrip of the state-owned upstream oil major hitting a record-high price of ₹406.40 on Wednesday, December 20. The positive sentiment in Oil India came on the back of the government cutting the windfall tax on crude oil produced in the country and on diesel exports on Monday, December 18.

The tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil has been reduced to ₹1,300 from ₹5,000 per tonne, according to an official notification. SAED on the export of diesel has been reduced to ₹0.50 a litre from ₹1 per litre.

Crude oil prices rising in the international market also aided the positive sentiment. The crude prices rose as the Red Sea shipping concerns weighed on the sentiment. The recent rocket attacks on ships in the Red Sea by Iran-backed and Yemen-based Houthi militants forced major shipping firms to reroute operations in the region. About 12% of world shipping traffic passes through the Red Sea via the Suez Canal route.

Brent crude futures rose $1.28, or 1.6 percent, to settle at $79.23 a barrel, the highest since December 1. US West Texas Intermediate crude futures for January delivery, which expired after settlement on Tuesday, rose 97 cents, or 1.3 percent, to settle at $73.44 a barrel, also the highest in over two weeks.

Domestic brokerage firm Antique has a 'buy' rating on Oil India with the target price set at Rs 419 per share.

"We believe that the company is on track to drive a 21% increase in oil production and a 51% jump in gas production in the medium term and increase its refining capacity 3x. The broader oil and gas price scenario remains stable with realizations being capped at USD 75/bbl and USD 6.5/mmbtu. The company is offering an FCF yield of 7% in FY26 at a normalized oil price assumption of USD 65/bbl. We maintain BUY with a target price of INR 419/share (vs. INR 375/share earlier), as we roll forward our estimates to FY26," Antique analysts said in a research note.

Oil India Ltd reported a 79.8% quarter-on-quarter decline in net profit at ₹325.3 crore for the second quarter that ended September 30, 2023. The firm had declared an interim dividend of ₹3.50 per share (35% of paid-up capital) for the financial year 2023–24.