Crisil assigns grade 4/5 to Oil India IPO

Oil India is coming out with an initial public offering (IPO) of 26,449,982 equity shares. The issue constitutes 11% of the post-issue capital of the company. Crisil has assigned a IPO Grade 4/5 to the proposed IPO of Oil India. This grade indicates that the fundamentals of the IPO are above average relative to the other listed equity securities in India.

Crisil's report Oil India IPO

Crisil has assigned a IPO Grade 4/5 to the proposed IPO of Oil India. The grading reflects OIL's strong position in the oil and gas exploration and production (E&P) space, especially in the onshore areas of India's north-eastern region. OIL has been consistently adding to its reserve base with its average reserve replacement ratio being greater than 2 for most of the last 5 years. Additionally, a favourable resource mix (mainly onshore acreage, considering its long experience in operating in the difficult terrains of Assam) in its portfolio coupled with a strong track record lends comfort to the company's capability to grow its recoverable reserves at a healthy rate.

As of March 2009, the company had cash and cash equivalent of Rs 61 billion or Rs 283.6 per share. This together with its cash generating ability and considerably low gearing would enable OIL to pursue growth opportunities in the global markets as well as comfortably fund its aggressive capital expenditure plans of Rs 104 billion drawn out for the Eleventh 5-Year period. The grading considers OIL's advantage over its competitors in terms of low finding and lifting costs. Further, the company's management has a strong understanding of E&P activities in onshore areas.

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Published on Wed, Aug 12, 2009 at 17:35 , Updated at Wed, Aug 12, 2009 at 18:10
Source : moneycontrol.com

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