Oil India shares climbed over 6% after reporting a record first-quarter net profit of Rs 2,870 crore, a 253% jump from last year. Revenue grew 59% to Rs 7,958 crore, boosted by higher crude oil prices. Motilal Oswal has maintained a neutral rating with a target price of Rs 485, as investors weigh strong growth against rising finance costs and regulatory risks.
Oil India shares saw a jump of more than 6% on Tuesday, reaching an intraday high of Rs 483.95. This market movement followed the company's release of its financial results for the first quarter of the 2027 fiscal year, where the state-run oil producer reported an all-time high profit for a first quarter.
The company’s standalone net profit for the quarter surged by 253% compared to the same period last year, reaching Rs 2,870 crore. Revenue from operations also saw strong growth, climbing 59% to Rs 7,958 crore. This performance was largely supported by higher crude oil realizations, with the average selling price of crude oil standing at roughly USD 98.7 per barrel during the quarter.
Brokerage firm Motilal Oswal has maintained a neutral rating on the stock with a target price of Rs 485. Looking at the growth strategy, the company has announced plans to ramp up drilling operations, with a goal to complete 100 wells by the 2027 fiscal year. Furthermore, its subsidiary, Numaligarh Refinery Limited, is working toward increasing its capacity usage to 75% by the end of the 2028 fiscal year.
While the operational performance was strong, the company faces several challenges that investors are monitoring. The company has made a significant provision of Rs 5,043 crore to cover GST payments on royalty, which creates regulatory uncertainty. Financial pressure is also evident as finance costs rose by over 61% compared to the previous year, primarily due to debt taken to fund major expansion projects. Additionally, the company has highlighted governance concerns related to the current non-compliance with requirements for appointing the necessary number of independent and woman directors.
Moving forward, the key things for investors to track include the company's ability to manage its rising debt and finance costs, and any progress in resolving the pending regulatory issues regarding tax payments. Fluctuations in global crude oil prices will also continue to impact future earnings.