Buy Oil India - Motilal Oswal

Expect step jump in gas production in 2014

INR60b earmarked for acquisitions; 1QFY13P subsidy at USD56/bbl

- Expect 1QFY13 provisional subsidy at USD56/bbl which translates into upstream sharing of 30% for the quarter.

- Delay in cash deployment is hurting return ratios; however, management indicated it is likely to announce an acquisition soon and has earmarked INR60b for the same.

- Planned capex for FY13 is INR33.8b with a target to drill 40/37 exploratory/development wells (v/s 16/22 in FY12).

- We continue to like Oil India due to its (a) high share of oil (58% in 1P and 64% in 2P) in its reserves, and (b) RRR of >1 for last 8 years to deliver consistent production growth. Maintain Buy with target price of INR565.

Source : Equity Bulls

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