Stock Analysis

Industry Analysts Just Upgraded Their Oil India Limited (NSE:OIL) Revenue Forecasts By 19%

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Shareholders in Oil India Limited (NSE:OIL) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

After the upgrade, the seven analysts covering Oil India are now predicting revenues of ₹395b in 2023. If met, this would reflect an okay 3.6% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing ₹333b of revenue in 2023. The consensus has definitely become more optimistic, showing a decent improvement in revenue forecasts.

Our analysis indicates that OIL is potentially undervalued!

NSEI:OIL Earnings and Revenue Growth November 26th 2022

We'd point out that there was no major changes to their price target of ₹244, suggesting the latest estimates were not enough to shift their view on the value of the business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Oil India analyst has a price target of ₹300 per share, while the most pessimistic values it at ₹165. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Oil India's revenue growth is expected to slow, with the forecast 7.2% annualised growth rate until the end of 2023 being well below the historical 41% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.1% per year. So it's pretty clear that, while Oil India's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Oil India this year. They're also forecasting more rapid revenue growth than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Oil India.

Want more information? We have analyst estimates for Oil India going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.