BUY : OIL INDIA LTD.

Historically, Oil India Ltd. (OIL) has grown reasonably well compared to its peers and has shown its competitive advantage in the exploration and development of deep-seated thin reservoirs. We expect crude oil prices to remain around US$80/ barrel in near future, which does not pose any financial risk despite its share in subsidy burden. On the back of increased exploration and development activities, better prospects of reserve accretion and monetization of its gas reserves, we believe that the company will continue to maintain the growth trajectory and margins going forward.

At the CMP of 1,151, the stock is discounting its FY11E and FY12E EPS by 9.9x and 9.7x and EV/ EBITDA by 5.3x and 4.3x, respectively. We value OIL India at Rs 1,332, assigning an EV/EBITDA multiple of 6.5x on our FY11E estimates and give a BUY rating.