Oil India’s buyback offer of 4.5 crore shares has been oversubscribed by 140.35 per cent or 6.3 crore shares as on Friday. The buyback at ₹340 apiece is at a 13 per cent premium to the company’s closing price of ₹300.50.

Make use of offer: analysts

The company’s board had announced the move to buyback shares on March 20. Despite the buyback news, the stock has declined by around 10 per cent in the last three months. The buyback offer, which started on May 23, is expected to close on Monday.

Investors are better off tendering their shares as the outlook for oil exploration companies is not bright, say analysts.

“Though oil producing and exporting countries will continue to cut output through March 2018, high global inventories and higher US production will act as a spoilsport for oil prices,” said Prathamesh Mallya (Chief Analyst — Non-Agri Commodities & Currencies, Angel Commodities Broking.

Prashant Tarwad, analyst at Axis Securities, observed that the outlook on commodity prices (crude oil, domestic natural gas) is muted, which will keep earnings growth capped for upstream companies.

Both the above factors, along with higher fixed costs due to ongoing capex (₹5,000 crore compared to ₹2,000 crore earlier), is expected to crimp the company’s profits in the next few years. Tarwad expects the company’s net profit to decrease at compounded annual growth rate of 10 per cent over FY18-20.

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