Stock To Buy: Buy This Oil & Gas Stock For 54% Upside, Dividend And Bonus Shares

Indian headline indices are up for the 3rd straight day tracking global cues. Meanwhile, as the Nifty crosses past 16,300 mark, here is a stock to buy for significant upside of over 50%, dividend and bonus shares.

Buy Indian Oil Corporation for Rs. 185/ share target

Even though the oil and gas sector major as per the brokerage has come out with below estimate results. It has maintained 'Buy' rating on the stock with a target price of Rs. 185, which given the current price of Rs. 119.8 translates into a potential upside of 54%.

IOCL Q4fy22 earnings: Below estimate as per Yes Securities

IOCL's reported operating profit at Rs 118bn (-20% YoY +26% QoQ) stood below our (Rs145bn) but broadly in-line with consensus estimates (Rs 119.8 bn). The miss on the brokerage's estimates stemmed primarily on higher than estimated operating expense, even as GRMs and gross marketing margins stood in-line.

Key highlights:

4QFY22 EBITDA/PAT at Rs 118bn (-20% YoY; +26% QoQ) and Rs 60.2bn (-31% YoY; +22% QoQ)

GRM stood at USD 18.54/bbl, in-line with expectations, as compared to USD 12/bbl in previous quarter and USD 10.6/bbl in same quarter last year. The strength in GRMs is likely driven by strong MS, HSD & ATF crack in aftermath of Russia-Ukraine conflict along with plausible inventory gains (no details available).

The refining throughput at 18.3mmt (3Q: 17.4), stood QoQ higher, implying 105.7% utilisation.

Total Domestic products sales stood at 20.1mmt, which was 6% higher YoY and 1% higher QoQ.

While MS sales at 3.2mmt reported a growth of 2% YoY and HSD sales at 8.8mmt stood flat on YoY basis. On QoQ basis while MS sales declined by 2%, HSD sales improved by 2%.

As per the brokerage's estimates Gross marketing margins stood at around INR 1834 per ton (not adjusted for inventory gain/loss)

 

Bonus share

The company has announced bonus share issuance in the ratio of 1:2, i.e. to every eligible shareholder, the company will be giving out 1 bonus share for every 2 shares held by the investor. In the filing the company said, " the Board has recommended iissue of Bonus Shares in the ratio of 1:2 i.e. One new bonus equity share of Rs. 10/- each for every Two existing equity shares of Rs 10/- each fully paid up subject to the approval of shareholders through postal ballot. The Board has fixed July 1, 2022 as record date to
determine the eligibility of shareholders to receive bonus shares

So, until one day before the ex-date on which the stock price adjusts for the bonus share issuance, you can buy the share of IOC and become eligible for additional bonus shares.

Dividend

In the filing the company also "informed that the Board has recommended a final dividend of Rs. 3. 60 per equity share having face value of Rs. 10/- each (pre-bonus), which translates into final dividend of Rs 2.40 per equity share having face value of Rs. 10/- each (post-bonus) for financial year 2021-22, subject to the approval of the shareholders of the Company. The final dividend would be paid within 30 days from the date of declaration at the AGM. The final dividend is in addition to the Interim Dividend(s) of Rs. 9. 00 per share (pre-bonus) paid for the financial year 2021-22. The record date for payment of final dividend would be fixed and intimated in due course

Disclaimer

The stock recommendation is taken from the brokerage report of Yes Securities. s. Investing in stocks is risky and investors must exercise caution. Greynium Information Technologies Pvt Ltd, the author and the broking house are not responsible for losses based on the article