Indian Oil Corporation Share Price: Jefferies Sees 16% Upside
Indian Oil Corporation (IOC), India’s largest oil marketing company, has recently drawn positive attention from global brokerage firm Jefferies. Following a strong Q4 FY24 performance, Jefferies has reiterated its Buy rating on IOC stock and set a target price implying a 16% upside from the current market levels. As of now, the Indian Oil Corporation share price stands at ₹138, and the brokerage remains confident that key structural and operational strengths will fuel future growth.
Let’s break down the three primary reasons why Jefferies remains bullish on IOC and believes the stock is poised for a rally.
1. Stronger-than-Expected Q4 Operating Performance
Indian Oil Corporation posted an impressive performance in Q4 FY24. The company reported earnings before interest, tax, depreciation, and amortization (EBITDA) of ₹13,500 crore, representing a 91% increase quarter-on-quarter (QoQ) and 29% rise year-on-year (YoY). This figure is 81% higher than Jefferies’ earlier estimates, largely thanks to better-than-expected refining and marketing margins.
These robust results signal improved operational efficiency and resilience amid global oil market volatility. The refining segment, in particular, outperformed expectations despite the industry grappling with fluctuating crude prices.
2. Robust Marketing Margins Despite LPG Losses
Despite incurring a loss of ₹5,600 crore in the liquid petroleum gas (LPG) segment, IOC’s overall marketing profitability in Q4 exceeded Jefferies’ projections. The average marketing margins were ₹5.9 per liter for petrol and a strong ₹9.6 per liter for diesel.
Jefferies believes that this performance showcases the company’s strength in managing margins across fuel products even under pressure from subsidies and under-recoveries. Furthermore, the brokerage notes that marketing margins have expanded further in Q1 FY26 with declining crude oil prices, though there is a possibility of a hike in excise duty which could offset some of the gains.
3. Upward Revision in Margin Estimates for FY26–FY27
Thanks to a favorable crude oil environment and the resilience in marketing margins, Jefferies has revised its EBITDA estimates for FY26 and FY27 upward by 15% and 17%, respectively. The brokerage assumes continued benign crude prices and inflated marketing margins as part of its forecast.
However, Jefferies also cautions that with crude oil down by ₹10 per liter in April, inventory losses are likely in the first quarter of FY26. Moreover, while the government has not provided compensation for LPG losses in FY25, the expansion in marketing margins more than offsets the impact.
IOC Financial Snapshot
Here’s a quick look at Indian Oil Corporation’s key financial ratios and stock data:
| Metric | Value |
|---|---|
| Market Capitalization | ₹1,94,675 Cr. |
| Current Share Price | ₹138 |
| 52-Week High/Low | ₹186 / ₹111 |
| Stock P/E Ratio | 16.0 |
| Book Value | ₹132 |
| Dividend Yield | 8.70% |
| Return on Capital Employed (ROCE) | 7.37% |
| Return on Equity (ROE) | 6.56% |
| Face Value | ₹10.0 |
With a high dividend yield of 8.7%, IOC remains an attractive pick for income-seeking investors. The current price is also close to its book value, which may limit downside risk and offer a margin of safety for long-term holders.
Conclusion: Why IOC Stock Deserves a Closer Look
With a strong Q4 showing, expanding marketing margins, and supportive crude prices, Indian Oil Corporation stands on solid ground. Jefferies’ upgraded outlook and 16% upside target reinforce IOC’s positioning as a value stock with stable income and growth prospects.
For investors seeking exposure to the energy sector with a balanced risk-reward profile, IOC may well be a compelling bet, particularly given its generous dividend and improving fundamentals.
Q&A: Key Takeaways About Indian Oil Corporation Share Price
Q1: Why did Jefferies raise the target price for IOC stock?
A: Jefferies upgraded its target due to strong Q4 results, higher-than-expected marketing margins, and a favorable crude environment.
Q2: What was IOC’s Q4 EBITDA and how did it compare to estimates?
A: IOC reported EBITDA of ₹13,500 crore, 81% above Jefferies’ estimates.
Q3: How did IOC manage to show profitability despite LPG losses?
A: Strong marketing margins from petrol and diesel helped offset LPG losses.
Q4: What are Jefferies’ margin expectations for FY26 and FY27?
A: Jefferies has raised its EBITDA estimates by 15% for FY26 and 17% for FY27.
Q5: Is IOC a good dividend stock?
A: Yes, IOC offers a high dividend yield of 8.7%, making it attractive for income investors.
Q6: What risks did Jefferies highlight for the near term?
A: Risks include potential inventory losses due to falling crude prices and no LPG loss compensation from the government.
For more market insights, follow our news.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like MoneyControl, ET, NSE India.