Indian Oil shares rise 3% as Jefferies upgrades to 'buy', sees 31% upside

IOCL shares have been on a sticky patch, tanking 18 percent in the last three months.

Shares of Indian Oil Corporation Limited (IOCL) gained 3 percent to Rs 145 in morning trade on December 13, snapping its two-day losing streak on the bourses after Jefferies upgraded the stock to buy and raised the target price citing robust growth prospects going forward.

With a price target of Rs 185, the international brokerage implies an upside potential of over 31 percent from the last closing price of Rs 141 on the National Stock Exchange. IOCL shares have been on a sticky patch, tanking 18 percent in the last three months. The previous target price by Jefferies was Rs 165.

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Jefferies suggests a favourable risk-reward balance following the steep correction over the past three months. The brokerage expects refining margins to strengthen in CY25, driven by accelerated capacity closures and robust demand. Among oil marketing companies (OMCs), Indian Oil stands out for its high refining-to-marketing ratio, making it the most leveraged to improvements in refining margins.

In the second quarter, the state-run oil refiner reported a net profit of Rs 180 crore aided by a one-time gain of Rs 1,157.3 crore, which is consequent to a favourable order from the Supreme Court in August 2024.

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Revenue for the quarter for Indian Oil Corporation stood at Rs 1.74 lakh crore. On a sequential basis, Indian Oil's revenue declined by 10 percent. Indian Oil's Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) fell by more than half, declining by 56 percent from the June quarter to Rs 3,773 crore. EBITDA margin for the quarter narrowed by 230 basis points from June to 2.2 percent.

At about 9:20 am, shares of the company were trading at Rs 143, higher by 1.4 percent from the last closing price on the NSE.

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