Oil India share price

Oil India’s Profits Explode by 464% in Q2 FY25: Are New Biogas Ventures Fueling This Surge?

Oil India Ltd, a key player in India’s energy sector, has announced significant developments in its financial performance and strategic partnerships. The state-owned company reported a remarkable 464% year-on-year increase in net profit, reaching Rs 2,069 crore for Q2 FY25, compared to Rs 640 crore in the same period last year. The jump in profits is accompanied by new joint ventures focused on advancing Compressed Biogas (CBG) projects, marking a major milestone in Oil India’s growth and sustainability efforts.

Following these announcements, Oil India’s share price surged nearly 6% on November 6, reflecting investor optimism. As of 10:39 am, the stock was trading 5.8% higher at Rs 524.55 on the National Stock Exchange (NSE). The share price has been on a remarkable upward trend, with a 107% increase this year alone, outpacing Nifty’s 10% gain, and has surged 153% over the past 12 months.

Financial Performance and Analyst Expectations

Despite the substantial rise in net profit, Oil India reported an 8% decline in revenue, down to Rs 8,136 crore for Q2 FY25. Analysts at Motilal Oswal and Kotak Institutional Equities had projected a net profit between Rs 1,667.7 crore and Rs 2,123.2 crore, alongside revenue estimates ranging from Rs 5,587.2 crore to Rs 5,977 crore, with actual results closely aligning with these forecasts.

On a sequential basis, Oil India’s net profit rose by 25% from the previous quarter to Rs 1,834 crore, though its revenue from operations dropped slightly by 1.6% quarter-on-quarter, totaling Rs 5,246.2 crore. The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) fell by 11.5% sequentially, reaching Rs 2,183.2 crore, with margins tightening from 46.3% to 41.6%.

Interim Dividend Announcement

In response to its robust performance, Oil India has declared an interim dividend of 30%, equivalent to Rs 3 per share based on a face value of Rs 10. The record date for this dividend is set for November 15, 2024, offering investors a direct share in the company’s impressive gains.

Strategic Joint Ventures in Compressed Biogas (CBG) Projects

Oil India has taken significant steps in sustainable energy by forming two new joint ventures to develop Compressed Biogas (CBG) projects. The first venture is in partnership with Hindustan Waste Treatment, and the second involves a collaboration with GPS Renewables and Bharat Petroleum Corporation Limited (BPCL). These partnerships are expected to enhance Oil India’s position in renewable energy, contributing to India’s goal of a greener energy future.

Expanding Exploration Efforts in Nagaland

In another strategic move, Oil India is set to commence exploration activities in Nagaland under the Open Acreage Licensing Policy (OALP). While the company currently has active drilling at 30 blocks, Nagaland operations have yet to begin but are part of Oil India’s long-term exploration plans to increase energy production capacity.

Oil India Stock Performance and Market Response

Oil India’s stock has seen significant growth, rising approximately 107% in 2024, far surpassing the broader Nifty’s 10% gain. Over the past year, the stock price has soared by 153%, more than doubling shareholder value and establishing Oil India as a top performer in the energy sector.

Conclusion:

Oil India’s Q2 FY25 results underscore the company’s financial resilience and strategic focus on growth through profit optimization and sustainable energy ventures. With a sharp profit increase, substantial stock performance, and promising joint ventures, Oil India is positioned for continued success in both conventional and renewable energy sectors.