Why Equinomics' Chokkalingam remains bullish on a PSU stock

Value investor Chokkalingam said the stock is still some 50 percent away from the peak of 3-4 years, despite having jumped 100 percent from the bottom.

Giving the rationale behind his bullishness on the stock, he said:

Oil India is likely to benefit from rising crude oil prices, which are up 56 percent on-year

Multiple benefits for shareholders; the company returns as much as 90 percent of profit as a dividend to shareholders

The company maintains a very high dividend

It rewards shareholders with bonus issues once in three years

: Why are oil prices high?

Besides, Oil India has a stake of about 69 percent in Assam's Numaligarh Refinery Limited (NRL), which is expanding its capacity by three-time to nine million tonnes, he said. "The financial closure also has happened already and the stock is trading only at a 5 PE despite the benefit of the oil theme," he said.

Chokkalingam believes that global oil prices can even touch the $100 per barrel quite soon. He sees Oil India as a defensive bet in case of a further fall in the market. "One may try to get the benefit out of rising oil prices through Oil India," he said. 

The company's recently generated cash will also come in handy for rewarding shareholders, he said, recommending a 'strong buy' on the stock.

As of Monday's closing price, it is still about 19 percent away from a 52-week high of Rs 267.7, touched in October 2021.

Chokkalingam belongs to the club of market experts sceptical on new-age company stocks.

Speaking on Zomato, he said: "I may be wrong but I don't find the value in this stock. Unless that is a critical profit growth in the next two years and the PE shrinks significantly, I will not touch this kind of stock."

His remarks come at a time when new age business stocks in India are mirroring the trend on the Nasdaq, where investors have lost appetite for highly valued tech companies.

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