Indian Oil Corporation Limited - Research Report

 

Indian Oil Corporation is an A /T+1group Refineries & Marketing company with having Face value of Rs. 10. Indian Oil Corporation Ltd is a Maharatna Company controlled by GOI, a diversified, integrated energy major with presence in almost all the streams of oil, gas, petrochemicals and alternative energy sources with state-of-the-art technologies and cutting-edge R&D a world where energy in all its forms is tapped most responsibly and delivered to the consumers most affordably. It has the leadership position in the Oil refining & petroleum marketing sector of India and reaches precious petroleum fuels to every nook and corner of the country through its network of over 58,000 plus customer touch-points, surmounting the challenges of tough terrain, climate and accessibility. The marketing network is backed by 70.05 MMTPA of Refining Capacity and more than 15,000 KM of cross-country pipelines and Over 36,285 Fuel Stations spread across India. Its LPG brand Indane caters to more than 140 million customers and it has a petrochemical production capacity of nearly 3200 KTA which makes it leading petrochemical players in India.

Fundamentals (FY22-23):

 

CMP	Rs. 89.3
52 - week high	Rs. 93.7
52 – week low	Rs. 65.2
Dividend % (consolidated)	9.41%
ROCE	8.15%
Book value (Rs.)	99.2
Revenue (Rs.)	8,41,756 cr.
Debt to Equity	1.07
P/E ratio	12.9
EPS (consolidated)	Rs. 6.93
P/B ratio	0.9
Market Cap	1,26,103 Cr.
Face value	Rs. 10.0

 

Financial Results:

Company’s Net Sales was Rs 203,872.27 crore in March 2023 up 16.3%, Quarterly Net Profit at Rs. 10,289.82 crore in March 2023 up 54.83% and EBITDA stands at Rs. 18,914.61 crore in March 2023 up 27.34% as compared to March 2022. Its EPS has increased to Rs. 7.47 in March 2023 from Rs. 7.24 in March 2022.

Key Points:

1. Indian Oil has joined the dream of GOI backed by Green Hydrogen policy by performing research in all facets of hydrogen, including production, storage and applications like fuel cells. It will also set up Green Hydrogen Plants at IndianOil refineries in Mathura and Panipat. Indian oil has also entered into JV with L&T and Renew  to strengthen the Green Hydrogen ecosystem in the country.
2. It owns 11 refineries across India with a total capacity of 80.60 MMTPA which is 32% of total refining capacity of India.
3. It IndianOil has a Solar PV capacity of around 70 MW & Wind Capacity of 168 MW, with a total renewable energy capacity of nearly 240 MW and Achieved the milestone of installing over 2000 EV charging stations at IndianOil Fuel Stations across the country.
4. It has also Collaborated with Israeli company Phinergy Limited to form 'IOC Phinergy Private Limited' (IOP) to commercialise the Aluminium-Air Battery technology in India.
5. As per the financial reports of FY22-23, the company has spent an all-time high amount of Rs 35,205 crores on investments, which is 123% of the allotted target by investing Rs 34,388 crores in its own projects and Rs 817 crores in joint ventures and subsidiaries. The company is currently overseeing 120 ongoing projects of various scales, with a total capital cost of around Rs 2.4 lakh crore.
6. Indian Oil Corporation Limited has partnered with Maruti Suzuki India Limited for offering Maruti Suzuki Rewards members additional benefits and convenience through the Maruti Suzuki Rewards program. The updated Maruti Suzuki Rewards App now includes a dedicated section for IndianOil customers, where they can view their IndianOil XtraRewards points and access features such as locating and navigating to their preferred IndianOil fuel station.
7. The IndianOil will be setting up Paradip Petrochemical Complex at Paradip, Odisha at an estimated cost of Rs 61,077 crore. This mega project will be largest-ever investment of IndianOil at a single location.
8. Indian Oil has planned a road map to consolidate all its green assets under one umbrella with an aim to aim to build a portfolio of 3 GW Renewable Energy and 0.6 MMT Biofuels by 2025; 35 GW Renewable Energy, 4 MMT Biofuels and 1 MMT Biogas by 2030 and 200 GW Renewable Energy, 7 MMT Biofuels and 9 MMT Biogas by 2050.
9. Recently the company launched AVGAS 100 LL, special aviation fuel meant for piston engine aircrafts and Unmanned Ariel Vehicles which is currently imported from European countries by India.
10. IndianOil and NTPC signed an agreement to form a joint venture company to meet the power requirements of upcoming projects of IndianOil refineries.

In last 3 years the stock gave a return of 15.4% as compared to the rise of Sensex and Nifty in the same period.

The company is a leader in market infrastructure as it controls 42% of retail outlets, 51% LPG distributorships and 48% of Aviation Fuel stations in India. It has Market share of more than 43% share in the domestic refining sector as on FY23 and owns one third of the India’s oil refining capacity. Mutual funds have also increased their holdings to 31.52% in March FY23 compared to 11.43 in year ago period. Considering a healthy dividend payout of 46.8%, good financial performance backed by market leadership and strong network, aggressive steps towards Green Energy and its aim to go Net Zero by 2046 including Green Hydrogen fuel and EV infrastructure, stock is recommended for long term period.

-  HET ZAVERI

 - info@smartinvestment.in

 

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