Low PE High ROE mulitbagger stock: This PSU energy company acquires stake in WorldAce Investment Limited!
The stock has a PE of 4x whereas the sectoral PE is 14x with ROE and ROCE of 22 per cent each.
Oil India Limited (OIL), through its wholly-owned subsidiary Oil India International BV (OBV), has acquired a 50 per cent stake in WorldAce Investment Limited (WIL) located in Cyprus. The remaining 50 per cent stake in WIL is owned by PetroNeft Resources (PR), an Irish company. WIL, in turn, holds 100 per cent equity in Stimul-T LLC, a legally registered entity in Russia that operates License 61 (Oil Block) in the Tomsk region of the Russian Federation.
Unfortunately, Stimul-T LLC, the owner and operator of the Oil Block, has filed for bankruptcy administration in Russia due to its inability to repay its creditors. The bankruptcy process in Russia is expected to be lengthy. As a result, it is currently uncertain whether OIL, through its subsidiary O BV, will be able to recover any loan advances, receivables or underlying asset values associated with its 50 per cent equity holding in WIL and consequently, in Stimul-T LLC.
Additionally, the company informed that Numaligarh Refinery Limited [NRL] has allotted 20,03,44,555 partly paid-up equity shares to Oil India Limited on May 10, 2023, against the right issue offer at Rs 10/share. [Amount paid on 1st call Rs 27.5/share]. Post allotment, the shareholding of Oil India Limited in NRL stands at 73.27 per cent.
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On Thursday, shares of Oil India zoomed 0.29 per cent to Rs 259.95 per share from its previous closing of Rs 259.20. The stock gave multibagger returns of 210 per cent in just 3 years. The shares of the company saw a spurt in volume by more than 1.16 times on BSE.
The stock has a PE of 4x whereas the sectoral PE is 14x with ROE and ROCE of 22 per cent each. Investors should keep an eye on this large-cap stock.