IOC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 My Thought Process

You're asking for a full-spectrum fundamental analysis of Indian Oil Corporation Ltd (IOC), with a numeric rating and strategic investment guidance. I’ve weighed profitability, capital efficiency, valuation, and business durability, and incorporated recent brokerage insights and technical indicators as of September 2025.

📊 Fundamental Analysis of Indian Oil Corporation Ltd

🔍 Core Financials

Profitability

PAT Qtr: ₹5,689 Cr vs ₹7,264 Cr — sequential dip, but YoY profit growth of 115% is impressive.

EPS: ₹11.3 — solid earnings base for a PSU.

ROE: 6.41%, ROCE: 7.26% — modest returns, typical for capital-intensive oil marketing businesses.

Leverage & Liquidity

Debt-to-equity: 0.81 — moderate, manageable given IOC’s scale and government backing.

Dividend Yield: 2.04% — attractive for income-focused investors.

Cash Flow & Stability

FY25 net profit: ₹12,028 Cr vs ₹41,615 Cr in FY24 — reflects volatility in refining margins and crude pricing

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IOC announced a ₹3/share final dividend in April 2025

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📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 14.4 Undervalued vs industry PE of 17.4

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P/B Ratio ~1.16 Reasonable given book value of ₹127

PEG Ratio -0.65 Negative — unreliable due to earnings volatility

Intrinsic Value ~₹160–₹170 Slight upside from current price

🛢️ Business Model & Competitive Edge

Segment Focus: Refining, marketing, petrochemicals, and pipeline infrastructure.

Moat: Largest oil marketing company in India with extensive distribution and refining capacity.

Growth Drivers

Strong refining fundamentals and marketing margins

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Strategic capex in green energy and petrochemicals.

Brokerage firms maintain a long-term target of ₹195/share, citing attractive EV/EBITDA multiples of 6x for FY28

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📈 Technical & Entry Guidance

Current Price: ₹147

DMA 50/200: ₹143 / ₹142 — bullish crossover.

RSI: 65.5 — approaching overbought zone.

MACD: 0.72 — mild bullish momentum.

🎯 Entry Zone

Ideal Buy Range: ₹140–₹145 — near DMA support.

Stop Loss: ₹132

Target: ₹175–₹195 in medium term

🕰️ Long-Term Holding Outlook

Hold if invested: Strong fundamentals, dividend yield, and sector leadership support long-term value.

Buy on dips: Preferably near ₹145 zone.

Growth Triggers: Refining margin recovery, green energy capex, and PSU reforms.

⭐ Fundamental Rating

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Moneycontrol

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Goodreturns

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