Buy Indian Oil Corporation; target of Rs 170: ICICI Securities

ICICI Securities research report on Indian Oil Corporation

We attended a group interaction of investors with IOCL management. Laying out his vision of a comprehensive roadmap for growth, Chairman MR AK Sawhney highlighted with the acronym SPRINT – Strengthening core business, Propel cost optimisation, Reinforce customer centricity, Integrate tech & innovation, Nurture leadership and be Transition ready. Aggressive capex plans are intended to gradually increase the share of petrochemical and specialty chemicals, shifting away IOCL’s dependence from simple refining while investments in renewables, biomass and gas are intended to diversify the business mix materially over FY26-30. Valuations remain comfortable and we remain sanguine on prospects over 12-18 months. BUY.

Outlook

Driven by the 15% drop in the stock price in past 12 months, the stock currently trades at an attractive 8.4x FY27E PER, 0.9x FY27E PBV and 6.4x EV/EBITDA. Our SoTPbased valuation, assigning an EV/EBITDA multiple of 5.5x (FY28E) to consol. EBITDA and valuing its listed investments at CMP, delivers a fair value of INR 170, ~17% upside (from CMP). Maintain BUY.

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