1:2 bonus shares & Rs 3.75/share dividend announced: President of India-backed multibagger oil company signs agreement with Numaligarh Refinery Ltd (NRL)

The stock gave multibagger returns of 150 per cent in just 1 year and a whopping 410 per cent in 3 years.

Oil India Ltd, a central public sector undertaking, is a major player in India's oil and gas industry. They focus on activities across the entire oil and gas production chain, including exploration, development, and production of crude oil and natural gas. They also handle the transportation of crude oil, production of liquefied petroleum gas (LPG), and even offer related services for oil blocks. Notably, the company was recently accorded "Maharatna" status in recognition of its significant contributions.

Oil India Limited (OIL), India’s oldest oil & gas company & the youngest Maharatna CPSE of Govt. of India and Numaligarh Refinery Limited (NRL), OIL’s material subsidiary company signed a new long-term Definitive Agreement for the transportation of additional petroleum products through OIL’s Numaligarh-Siliguri Product Pipeline (NSPL) following the commissioning of Numaligarh Refinery Expansion Project.

The agreement was signed by Shri Pankaj Kumar Goswami, Director (Operations), OIL & Shri Sanjay Choudhury, Director (Finance), NRL in the presence of Dr Ranjit Rath, Chairman & Managing Director OIL & Chairman NRL, Shri Bhaskar Jyoti Phukan, Managing Director (NRL), and Functional Directors, CVO and senior officials from both the Companies in a ceremony held on 20th May 2024 in New Delhi. The Agreement will be effective from the date of commencement of augmented pipeline operations for a period of 25 years.

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Currently, OIL evacuates 1.72 MMTPA of petroleum products through NSPL, delivering to the Marketing Terminal of NRL at Siliguri. Since its commissioning in 2008-09, the NSPL has served as the lifeline for evacuating products from NRL’s Refinery to Siliguri Marketing Terminal for onward distribution to various demand centres in eastern and northern India. In line with Hydrocarbon Vision 2030 for Northeast India, NRL is executing Numaligarh Refinery Expansion Project to enhance capacity from 3 to 9 MMTPA.

To evacuate NRL’s additional petroleum products through existing NSPL, OIL & NRL entered into an MOU in December 2020 under which, OIL agreed to invest for augmenting the capacity of the NSPL from 1.72 MMTPA to 5.50 MMTPA by way of establishing additional booster pump stations and other facilities at different pump stations along its right of way.

The Board of Directors of the company has recommended the issue of bonus shares in the ratio of 1:2 i.e., 1 equity share of Rs 10 each for every 2 existing equity shares of Rs 10 each fully paid up subject to the approval of shareholders through Postal Ballot [E-Voting]. The Board has fixed Tuesday, July 02, 2024, as the Record Date to determine the eligibility of shareholders to receive bonus shares.

Additionally, the Board has recommended a final dividend of Rs 3.75 per equity share having a face value of Rs 10 each (pre-bonus), which translates into a final dividend of Rs 2.50 per equity share having a face value of Rs 10 each (post-bonus) for the financial year 2023-24, subject to the approval of the shareholders of the company. The final dividend would be paid within 30 days from the date of declaration at the AGM. The final dividend is in addition to the interim dividend of Rs 3.50 (pre-bonus) and the second interim dividend of Rs 8.50 (pre-bonus) paid for the financial year 2023-24. The record date for payment of the final dividend will be fixed and intimated in due course.

Standalone Results

According to Quarterly Results, the net sales increased by 2 per cent to Rs 5,756.73 crore and net profit increased by 13.5 per cent to Rs 2,028.83 crore in Q4FY24 compared to Q4FY23. In its annual results, the net sales decreased by 4.9 per cent to Rs 22,129.79 crore and net profit decreased by 18.5 per cent to Rs 5,551.85 crore in FY24 compared to FY23.

Consolidated Results

According to quarterly results, the net sales increased by 16 per cent to Rs 10,165.78 crore and net profit increased by 17.8 per cent to Rs 2,332.94 crore in Q4FY24 compared to Q4FY23. In its annual results, the net sales decreased by 11.5 per cent to Rs 36,303.62 crore and net profit decreased by 29.2 per cent to Rs 6,980.45 crore in FY24 compared to FY23.

Today, shares of Oil India Ltd zoomed 2.5 per cent to Rs 669.90 per share from its previous closing of Rs 653.55. The stock’s 52-week high is Rs 674.50 and its 52-week low is Rs 240.65.

The company has a market cap of over Rs 70,000 crore and has delivered good profit growth of 26.1 per cent CAGR over the last 5 years. The stock has a PE of 10x whereas the sectoral PE is 16x with ROE and ROCE of 26 per cent each.

The President of India owns the majority of the stake i.e., 56.66 per cent. The stock gave multibagger returns of 150 per cent in just 1 year and a whopping 410 per cent in 3 years. Investors should keep an eye on this Mid-Cap stock.  

Disclaimer: The article is for informational purposes only and not investment advice.