Rajesh Agarwal, Head of Research at Eastern Financiers told CNBC-TV18, “One can continue holding Indian Oil Corporation (IOC), not only IOC, but other oil marketing companies (OMCs) like Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) also. As far as IOC is concerned we have a price target of around Rs 325 in the next six months.”
He further added, “We believe that all these OMCs are trading at a huge discount to their intrinsic value; just because of the subsidy burden which they used to have. Now, with subsidy burden going down, with diesel price almost delinked and even LPG cylinders capped, we think that it is just a mater of time when these stocks start giving good returns.”
“Moreover, these stocks give regular dividend to shareholders and hence we recommend a buy on the stock. For a medium-term horizon that is six months, the target is Rs 325, for long-term horizon the targets might be much higher,” Agarwal said.