Oil Sector PSU Stock To Buy For Robust 32% Gains, Board Recommends Dividend, Says ICICI Securities

ICICI Securities maintains Buy on the stock of Indian Oil Corporation Ltd. (IOCL) with a target price of Rs. 115/share. If you buy the stock at the current market price, it is likely to give a decent return of 32% considering the given target price by the brokerage firm.

On Tuesday, May 16, 2023, the Board recommended a final dividend of 30% for the financial year 2022-23. IOCL is a large-cap Maharatna - CPSE engaged in engaged in Oil & Gas Sector. It has a target capitalisation of Rs. 1,23,631 crore.

30% Final Dividend

The company said in an exchange filing, "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.

All-round improvement in operational metrics, Buy

ICICI Securities said, "We have raised our retail margin forecast to Rs2.5-3/ltr for both FY24E and FY25E and have reduced GRM assumptions by ~US$2.5/bbl for FY24E. Our consolidated EPS reduces marginally to factor-in lower GRMs for CPCL; however, we raised FY25E EPS by 14% due to stronger marketing margins and normalised GRMs. Valuations at 4.9x FY25E P/E, 4.7x EV/EBITDA and 0.7x P/BV remain attractive. We believe dividend yield of ~7.4% (average estimated for FY24E/FY25E) and the support from CPCL earnings make risk-reward favourable for IOCL. Our FY24E EV/EBITDA based valuation of Rs115/sh implies 32% upside. Maintain BUY."

Stock Outlook & Returns

The stock last traded at Rs. 87.55/share, up by 0.63% from its previous close of Rs. 87/share. The stock traded its 52-week high at Rs. 88.60/share on 17 May 2023. While it traded the 52 week low on 29 September 2022 at Rs. 65.20/share.

The stock jumped in 1 week by 3.92%, whereas it jumped 13.33% in 1 month. It gave 5.57% return in 1 year and 73.94% in 3 years, respectively. It has fallen 20.29% in 5 years,

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. 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.