Buy Indian Oil Corporation, target price Rs 98: Motilal Oswal Financial Services

Motilal Oswal Financial Services has buy call on Indian Oil Corporation with a target price of Rs 98. The current market price of Indian Oil Corporation is Rs 77.8. Indian Oil Corporation, incorporated in the year 1959, is a Large Cap company (having a market cap of Rs 110145.66 Crore) operating in Gas & Petroleum sector.

Indian Oil Corporation key Products/Revenue Segments include Petroleum Refinery Products, Other Operating Revenue, Scrap, Sale of services, Other Services and Subsidy for the year ending 31-Mar-2022.

Financials

For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 233800.98 Crore, down -8.67 % from last quarter Total Income of Rs 256004.60 Crore and up 35.42 % from last year same quarter Total Income of Rs 172646.31 Crore. Company has reported net profit after tax of Rs -1156.88 Crore in latest quarter.

The company’s top management includes Mr.Shrikant Madhav Vaidya, Mr.Krishnan Sadagopan, Mr.Sudipta Kumar Ray, Mr.Prasenjit Biswas, Dr.Dattatreya Rao Sirpurker, Dr.Ashutosh Pant, Mr.Dilip Gogoi Lalung, Mr.Sujoy Choudhury, Ms.Sukla Mistry, Mr.D S Nanaware, Mr.V Satish Kum, Ms.Indrani Kaushal, Mr.Navneet Mohan Kothari, Ms.Lata Usendi, Mr.Sandeep Kumar Gupta, Mr.Ranjan Kumar Mohapatra, Dr.S S V Ramakumar, Mr.G K Satish, Prof. (Dr)Ram Naresh Singh. Company has V Singhi & Associates as its auditors. As on 30-09-2022, the company has a total of 1,412 Crore shares outstanding.

Investment Rationale
IOCL is set to commission various projects over the next two years, boosting growth. As per its earlier guidance, the ongoing projects are expected to be completed as follows: Panipat refinery (25mmtpa) by Sep’24, Gujarat refinery(18mmtpa) by Aug’23, and Baruni refinery (9mmtpa) by Apr’23. The brokerage expects a dividend payout of ~51% over FY23-24. Motilal values the stock at 0.9x blendedFY24-25E P/BV to arrive at our TP of Rs 98.

Promoter/FII Holdings
Promoters held 51.5 per cent stake in the company as of 30-Sep-2022, while FIIs owned 16.59 per cent, DIIs 11.23 per cent.