Oil India: Refinery expansion delayed; trim estimates; Maintain BUY with Target Price of Rs 495
By Ankur Chandra | Updated at: Jan 5, 2026 07:44 PM IST
Oil India’s material subsidiary, Numaligarh Refinery Ltd (NRL), was supposed to commence operations of the expanded refinery capacity (from 3MMTPA to 9MMTPA) in phases from December 2025 onwards. However, the commencement of refinery operations has been delayed. We now expect operations to commence in Q4FY26 and expect the refinery to gradually ramp up in succeeding quarters. Hence, we trim our FY26/27E EPS estimates by 1.6/9.1% respectively. However, we maintain the BUY recommendation with a revised target price of INR 495. We believe Oil India’s standalone gas and oil production should grow at 9% and 4% CAGR over FY25-27E respectively.
Delay in completion of NRL refinery capacity expansion: OINL’s material subsidiary, Numaligarh Refinery Ltd (NRL), is in the process of expanding its refinery capacity from 3MMTPA to 9MMTPA. The expanded capacity, which was anticipated to be commissioned in a phased manner from Dec 2025, has seen delays and is yet to be completed. We were confident of NRL achieving its stated target and hence expected the additional capacity to come online in Dec. However, given the delay in commissioning of the expanded refinery capacity, we now expect the capacity expansion to conclude by Q4FY26 and gradually ramp up in subsequent quarters. Hence, we trim OINL’s consolidated EPS estimates for FY26/27 by 1.6/9.1% respectively.
USD appreciation partially offsets Brent crude price reduction: Given that Brent crude oil prices have a direct impact on Oil India’s crude oil realization and profitability, a USD 1 per barrel decline in Brent crude oil prices could result in Oil India’s standalone annual EPS declining by ~2%. Similarly, any depreciation of INR against USD bodes well for OINL’s earnings since a INR 1 depreciation in INR/USD could result in annual EPS increasing by 2.6%. Average Brent crude oil prices depreciating by USD 5/bbl (~7%) in the last three months should have a negative impact on OINL’s earnings. However, this decline in earnings will be partially offset as INR depreciated by INR1.7 (~2%) during this time.
Change in estimates and valuation: Considering the delayed commencement of NRL’s expanded refinery capacity and INR depreciation against USD, we tweak our FY26/27E EPS estimates by -1.6/-9.1% to INR 43.0/36.9. We value Oil India’s standalone business at INR 240/sh (8x Mar-27E EPS) and its investments at INR 255/sh, leading to a target price of INR 495/sh.
Consolidated financial summary
| YE March (INR bn) |
FY23 |
FY24 |
FY25 |
FY26E |
FY27E |
| Revenues |
410.39 |
363.04 |
361.64 |
344.48 |
364.09 |
| EBITDA |
152.68 |
125.04 |
112.16 |
115.42 |
111.82 |
| APAT |
87.29 |
82.90 |
65.51 |
69.89 |
60.02 |
| AEPS (INR) |
53.7 |
51.0 |
40.3 |
43.0 |
36.9 |
| P/E (x) |
7.6 |
8.0 |
10.1 |
9.4 |
11.0 |
| EV/EBITDA (x) |
5.5 |
7.1 |
8.4 |
5.5 |
5.4 |
| RoE (%) |
25.3 |
19.1 |
13.4 |
13.0 |
9.9 |
Source: Company, HSIE Research
Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest. The recommendation given here is general in nature. Do not make any investment based on this recommendation as it is not based on your unique risk profile and investment goals. Investment in stocks is subject to market risks and other risks. There is no guarantee of the return that will be actually realized.
Source: HDFC Securities Institutional Equities
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