Indian Oil Corporation shares hit Rs 100 level as board considers rights issue

Shares of Indian Oil Corporation Limited (IOC) on Friday breached the Rs 100 level to hit a fresh 52-week high ahead of the state-run firm's board meet on rights issue. The IOC board would meet today to consider raising of capital through right issue of equity shares to meet the capital expenditure plan for its various projects. The issue, if considered, would be subject to various statutory approvals as may be required, the largest state-owned oil refiner in the country said.

The stock jumped 2.63 per cent tot hit a fresh one-year high of Rs 101.20 on BSE. with this, shares of IOC are up 29.46 per cent year-to-date and 38.90 per cent in the last one -year. The average share price target for the stock at Rs 101, as per Trendlyne, however suggests no upside ahead.

Fitch Ratings on Wednesday said IOC's plans to raise capital should strengthen their capex spending and the credibility of emission-reduction plans. An injection of capital from the Indian government would provide further evidence for assumption that the OMCs would receive extraordinary sovereign support if needed, the key factor underpinning their stable ratings, the credit rating agency said.

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To recall, IOC has already approved an increase in its authorised share capital of Rs 15,000 crore. "We believe the size of the planned aggregate equity infusion may be higher than the budgetary allocation due to minority investors’ participation in the rights issues, but will monitor developments for more clarity," it said.

IOC is expected to report operationally strong June quarter results due to sharp recovery in marketing margins, which Prabhudas Lilladher expects at Rs 9 per litre (blended margins) against Rs 3 in the March quarter. It sees profit for June quarter at Rs 10,347.20 crore against a loss of Rs 1,992.50 crore in the year-ago quarter. Sales are seen falling 12.7 per cent YoY to Rs 1,95,814 crore from Rs 2,24,252 crore in the same quarter last year. Margin is seen at 9.1 per cent against 0.6 per cent YoY, Prabhudas Lilladher said in its results preview note.

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