Oil India (OIL)

FairStock Score: 50/100 — MIXED

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 1/1

Key Financials

Strengths

• P/E of 13.50 and P/B of 1.55 are moderate, with Graham Number ₹496.72 slightly above the current price.
• Promoter holding of 56.66% provides ownership stability.
• ROE of 11.72% and ROCE of 12.89% are reasonable for an upstream oil producer.
• Five-year revenue CAGR of 12.47% shows past expansion despite recent weakness.
• Dividend yield of 2.38% offers some income cushion.

Concerns

• Profit growth is negative at -21.01% while sales growth is only 1.86%.
• Free cash flow is sharply negative at ₹-2,182 Cr, indicating weak cash generation.
• Altman Z-Score of 1.54 points to financial stress, and EV/EBITDA of 200.70 is extremely stretched.
• Debt-to-equity of 0.64 adds risk in a cyclical commodity business.

AI Analysis

At first glance, Oil India looks like the kind of stock Graham might screen: price-to-earnings of 13.50, price-to-book of 1.55, and book value of ₹305.96 against a share price of ₹473.85. But valuation is only the starting point. The Graham Number is ₹496.72, so the margin of safety is just 2.58%—not enough for a commodity producer. This is a cyclical business, not a franchise with pricing power. Revenue growth over five years compounded at 12.47%, but the latest year tells a different story: sales growth of 1.86% and profit down 21.01%. A single quarter with ₹8,330 Cr revenue and ₹1,436 Cr net profit shows scale, but the trend is weak. Return on equity of 11.72% and ROCE of 12.89% are acceptable, but not wonderful. The debt-to-equity of 0.64 is manageable for an oil company, though free cash flow of minus ₹2,182 Cr worries me—earnings are not converting into cash. The dividend yield of 2.38% helps, but a negative free cash flow makes that dividend less secure. Promoter holding at 56.66% is reassuring, but it does not change the economics. The Altman Z-Score of 1.54 sits in the danger zone, and EV/EBITDA of 200.70 is a red flag that EBITDA is too low or the enterprise value is excessive. Buffett would say it is far better to buy a wonderful business at a fair price than a fair business at a wonderful price. Oil India is not wonderfully priced; it is only statistically cheap on earnings. I would wait for a larger margin of safety, improved cash generation, or evidence that oil prices have stabilized before treating this as a long-term investment.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer