Paradip refinery to drive better profitability
Indian Oil Corporation Ltd. (IOCL) has a strong presence in refining, marketing, pipelines networks and petrochemicals. It is the largest oil marketing company in India with a ~43% market share. Further, it has the largest network of retail outlets across the country (more than 26,000 outlets). IOCL also has minor interest in the upstream segment.
Valuation: Within state oil marketing companies (OMCs), IOCL is our top pick given its diversified business model, further ramp-up of Paradeep refinery and potential upside in marketing segment. Moreover, IOCL also offers an attractive dividend yield of ~4.6%. Hence, we continue to maintain BUY rating to the stock with a target price (TP) of Rs. 468 using sum of the part (SOTP) valuation methodology wherein we value its standalone business at Rs. 427 (P/E of 10.0x for FY19E) and investments at Rs. 41.
Investments in equity shares, debentures, etc., are not obligations of, or guaranteed by Wealth India Financial Services Pvt. Ltd., and are subject to investment risks. Click here to read our full disclaimer.
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