Imagine fueling your vehicle at one of the 58,000 retail outlets across India – chances are, it’s run by the Indian Oil Corporation (IOC). With a refining capacity of around 70 million tonnes, IOC stands as the nation’s largest retailer of petrol and diesel.
Despite a recent dip in quarterly profits, IOC’s annual net profit soared 268% to Rs. 43,161.15 crore in FY24 from Rs. 11,704.26 crore in FY23. Guided by the motto ‘Pehle Indian Phir Oil,’ IOC prioritizes national progress, making it an intriguing investment prospect for 2024.
In this article, we’ll analyze the company’s shares and decide whether you should invest in Indian Oil Corporation in 2024.
About Indian Oil Corporation Ltd.
Indian Oil Corporation (IOC) is India’s largest public-sector oil and gas company, managed by the Ministry of Petroleum and Natural Gas. It was formed in 1964 from the merger of Indian Oil Company Limited (1959) and Indian Refineries Limited (1958). IOC has subsidiaries in Mauritius, Sri Lanka, and the Middle East.
IOC is a trusted brand in India, supplying cooking gas to most Indian families through 12,861 distributors. It also has the largest downstream pipeline network, stretching 17,564 km.
In FY24, IOC reported a revenue of Rs. 7.76 trillion (down 7.8% from FY23), a net income of Rs. 417.3 billion (up 326%), and a profit margin of 5.4% (up from 1.2% due to lower expenses). Its EPS rose to Rs. 30.30 from Rs. 7.11 in FY23.
Analysis of Indian Oil Corporation Stock
Let’s take a closer look at the Indian Oil Corporation share price to understand if you should invest in this company.
Historically, the company’s share price has been influenced by various factors, including global oil prices, government policies, and the company’s investments in renewable energy.
As of June 2024, IOC’s share price stands at Rs. 165. Over the past 52 weeks, it has ranged from a low of Rs. 163.80 to a high of Rs. 166.64. The company has a price-to-earnings (PE) ratio of 5.61 and a price-to-book (PB) ratio of Rs. 130.
Its return on capital employed (ROCE) is 21.2%, and its return on equity (ROE) is 25.8%, which suggests that it has efficiently usage of its operational resources and has delivered a return to its shareholders.
According to analysts, the Indian Oil Corporation’s target price is Rs. 195, with a maximum estimate of Rs. 252.00. This analysis reflects both the current performance and future potential of IOC’s share price. This will have a positive impact on the Indian Oil Corporation share price chart.
Should You Invest in IOC in 2024?
Investors with a 2-3 year time horizon and moderate risk appetite can consider investing in Indian Oil Corporation shares in 2024 as it is India’s largest oil and gas company. For this, here are some of the pointers to consider.
Benefits of Investing in IOC
- In 2024, the Indian Oil Corporation (IOC) could benefit from the Indian government’s strong support for renewable energy under the “Atma Nirbhar Bharat” initiative, which promotes self-reliance through incentives and subsidies for renewable development.
- IOC is expanding into the production of alternative fuels, biofuels, and other innovative products which positions it as a great investment opportunity for 2024.
- The company already occupies a dominant position in India’s petroleum market, with about 70% share in downstream pipelines and 30% in refining capacity further strengthening its position.
Risks of Investing in IOC
Investing in IOC does not come without risks.
- The company faces increasing competition from both domestic and international players, which could affect its market share.
- Consumer’s shift towards electric vehicles and other renewable energy sources also poses a threat to the demand for petroleum-based products.
- Fluctuations in global oil prices can also significantly impact IOC’s profitability, given its reliance on crude oil imports. Moreover, any changes in government policies or regulations could slow down the company’s growth.
Conclusion
To conclude, there are promising opportunities for the Indian Oil Corporation due to the growth driven by government support and market expansion into renewables. However, potential investors should also be mindful of the risks associated with competition, market shifts, and regulatory changes to make an informed decision.
