Kotak is also optimistic that inexpensive valuations and good dividend yield of 5 percent will provide adequate support on the downside. “Potential clarity on the subsidy-sharing mechanism, likely by May is likely to ensure higher level of net crude realisations and provide comfort to earning estimates,” it says in a report.
Shares of Oil India surged 6 percent intraday on Thursday after Kotak upgraded its rating. The brokerage has a buy rating on it with an unchanged target price of Rs 615 per share. It believes that the stock is discounting a fairly bleak scenario of no improvement in net crude realisations after subsidy burden. Kotak is also optimistic that inexpensive valuations and good dividend yield of 5 percent will provide adequate support on the downside. “Potential clarity on the subsidy-sharing mechanism, likely by May is likely to ensure higher level of net crude realisations and provide comfort to earning estimates,” it says in a report. Oil India’s net profit slipped 44.8 percent to Rs 498 crore in the October-December quarter from Rs 903 crore in the corresponding quarter last fiscal. During the period, its sales also dropped Rs 2061.5 crore, down 21 percent from Rs 2609.8 crore year-on-year. At 12:26 hrs the stock was at Rs 489.00, up Rs 10.35, or 2.16 percent on the BSE.
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