INDIAN OIL CORPORATION LIMITED
What should be the strategy for Indian Oil Corporation Limited? - Devendra Kumar Singh
Indian Oil Corporation Limited (IOCL) is one of the biggest oil refinery companies in India and across the globe. The company’s operations include sale of petroleum products and petrochemicals. The company’s other businesses including sale of gas, explosives and cryogenics, wind mill and solar power generation, and oil and gas explorations.
The company’s business interests also extend to the hydrocarbon value chain segment. The company has big energy brands with wide-ranging presence such as Indane Liquefied Petroleum Gas (LPG) cooking gas, Servo lubricants, Xtramile diesel, among others.
On the financial front, IOCL posted a 19.58 per cent rise in its revenue from ₹1,07,197.10 crore in Q1FY17 to ₹1,28,190.50 crore in Q1FY18. However, the company’s profit before interest, depreciation and tax (PBIDT) stood at ₹7,999.57 crore in Q1FY18, down by 41.52 per cent on a year-on-year basis. The profit after tax of the company also decreased by 44.99 per cent to ₹4,548.51 crore in the first quarter of FY18, against a PAT of ₹8,268.98 in Q1FY17.
On an annual basis, the company’s revenue increased 9.47 per cent to ₹4,45,372.91 crore in FY17 from ₹4,06,827.99 crore in FY16. The company’s PBIDT stood at ₹31,781.06 crore in FY17, up by 50.99 per cent from ₹21,048.59 crore in FY16. The company’s profit after tax stood at ₹19,106.40 crore, up by 69.95 per cent in FY17 from ₹11,242.23 crore in FY16.
On the valuation front, the share price of IOCL is trading at PE of 13.47x as against its peers such as HPCL (13.39x) and BPCL (17.69x). The company’s PE also seems to be slightly undervalued in comparison with the industry PE of 15.81x. The stock is on a growth momentum. We recommend readerinvestors to Hold the stock.