Motilal Oswal Reiterates Buy On Oil PSU Stock, Sees 22% Gain, 30% Final Dividend, Hit 52-Week High

Broking firm Motilal Oswal reiterates its BUY rating on Indian Oil Corporation Ltd. (IOCL), valuing it at 0.9x FY25E P/BV. The brokerage has estimated a target price of Rs. 112 apiece for the stock. Considering the given target price, the stock is likely to give a strong return of 22% if it is purchased at the current market price.

IOCL has the highest exposure to refining among OMCs and it will be the most affected by declining GRMs, according to Sharekhan.

IOCL is a Maharatna category Oil sector PSU company. Its market capitalisation is Rs. 1,29,703 crore. It is a large cap company.

Final Dividend

On May 16, 2023, the Board of Directors in a meeting recommended a Final Dividend ofRs. 3/- per equity share of face value of Rs.10/- each on the paid-up share capital i.e. 30% for the financial year 2022-23.

According to an exchange filing by Board of Directors of IOCL, "the Board has recommended a final dividend of 30% for the year 2022-23 i.e. Rs. 3/- per equity share of face value of Rs.10/- each on the paid-up share capital, subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company. The final dividend would be paid within 30 days from the date of declaration at the AGM. The record date for payment of final dividend would be fixed and intimated in due course."

Valuation and view

According to Sharekhan, IOCL is set to commission various projects over the next two years, driving growth further. Refinery projects, currently underway, are likely to be completed as follows: Panipat refinery (25mmtpa) by Sep'24, Gujarat refinery (18mmtpa) by Aug'23, and Baruni refinery (9mmtpa) by Apr'23, according to the earlier guidance. "IOCL is likely to be hit the most among its peers from a decline in refining margin. We value the stock at 0.9x FY25E P/BV to arrive at our TP of INR112. We reiterate our BUY rating on the stock," the brokerage has said.

Stock Outlook

On Monday, the share price of IOCL last traded at Rs. 91.85 apiece, up 1.72% from its previous close of Rs. 90.30 apiece. The stock traded the 52 week high on 12 June 2023 at Rs. 92/share and 52 week low on 29 September 2022 at Rs. 65.20 apiece, respectively.

The stock has gained 2.91% in the past 1 week, 9.93% in the past 1 month and 16.41% in the past 3 months, respectively. The stock has given 17.51% positive return in the past 1 year and 56.03% in the past 3 years, respectively. It has fallen 20.89% in the past 5 years.

Disclaimer - The above PSU stock has been picked from Motilal Oswal Financial Services's Oil & Gas Sector report. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.