IOC shares gain as Jefferies raises price target

Shares of Indian Oil Corporation Limited (IOCL) rose 3 percent amid a falling market today after global brokerage Jefferies upgraded the stock to buy and raised its price target to Rs 185, citing robust growth prospects. The previous target price by Jefferies was Rs 165. Snapping its two-day losing streak, the IOC stock rose 3% to Rs 145 on Friday against the previous close of Rs 141.50 on BSE. Market cap of the firm stood at Rs 2.01 lakh crore.  

The fresh target of Rs 185 implies an upside potential of over 31 percent from the last closing price of Rs 141 on the National Stock Exchange. In the last three months, IOC shares have fallen 18%. 

Jefferies indicated a favourable risk-reward balance following correction over the past three months. The brokerage sees refining margins to improve in CY25, led 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.

Domestic brokerage Antique Broking has a price target of Rs 246 and a buy call on the energy sector stock. 

The oil refiner reported a net profit of Rs 180 crore in Q2 boosted 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.

Q2 Revenue stood at Rs 1.74 lakh crore. On a sequential basis, Indian Oil's revenue declined by 10 percent. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) fell by more than half or 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.