Indian Oil joins Rs 2-lakh crore m-cap club; stock hits fresh high

The stock hit a lifetime high of Rs 418, up 2.3% on the BSE in intra-day trade.

Indian Oil Corporation Limited (IOCL) has entered into the elite league of corporate entities with a market value of over Rs 2 lakh crore after the stock price of the company hit new high on the BSE.

IOCL, the oil marketing giant, with the m-cap of Rs 203,171 crore cam in at number ninth position in overall m-cap ranking, the BSE data shows. The company surpassed the fast moving consumer goods (FMCG) major Hindustan Unilever (HUL), which held m-cap of Rs 200,202 crore at 10:36 am.

IOCL stock hit a lifetime high of Rs 418, up 2.3% on the BSE, as compared to 0.16% decline in the S&P BSE Sensex. Thus far in the calendar year 2017, the stock has outperformed the market by surging 29% against 11% rise in the benchmark index.

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The move is expected to shield these oil marketing companies (OMCs) from the volatility in global crude prices, which keep changing every day. The public sector OMCs — IOCL, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) — usually revise retail prices of petrol and diesel every fortnight.

Religare Institutional Research reiterate ‘buy’ rating on the stock as analysts expects base gross refining margins (GRMs) to move up as the refining business benefits from Paradip refinery ramp-up coupled with higher throughput.

“Competition from private refiners will have the least impact on IOCL considering marketing EBITDA is 20% of the total (vs. 50-60% for HPCL/BPCL), marketing EBITDA/unit is the lowest among OMCs and refining earnings (50% of total EBITDA) will remain the primary growth driver post efficiency gains, while pipelines and petrochemicals (around 30% of total) provide stability,” Religare Institutional Research said in recent report.

IOCL is the third public sector undertaking company (PSU), having m-cap of an over Rs 2-lakh crore.  Oil and Natural Gas Corporation (Rs 2.39 lakh crore) and State Bank of India (Rs 2.37 lakh crore) among other PSUs are in the list.

Besides these three, total 10 companies have m-cap of more than Rs 2-lakh crore. The list includes Tata Consultancy Services, Reliance Industries, HDFC Bank, ITC, Housing Development Finance Corporation, Infosys and HUL.