IOC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.8

📊 Core Financials

• Revenue & Profit: Quarterly PAT surged from ₹5,689 Cr. to ₹7,610 Cr. (1,016% growth), showing strong recovery.
• Margins: ROE (6.41%) and ROCE (7.26%) remain modest compared to industry peers.
• Debt: Debt-to-equity ratio at 0.74 indicates moderate leverage.
• Cash Flows: Dividend yield of 3.11% reflects consistent shareholder returns.

💹 Valuation Indicators

• P/E Ratio: 10.0 vs Industry PE of 11.3 → slightly undervalued.
• P/B Ratio: Current Price ₹163 / Book Value ₹133 ≈ 1.23 (reasonable valuation).
• PEG Ratio: -0.45 → distorted due to volatile earnings growth.
• Intrinsic Value: Fairly valued with limited downside risk, supported by strong EPS (₹16.6).

🏢 Business Model & Competitive Advantage

• Indian Oil Corporation (IOC) is India’s largest oil refining and marketing company.
• Strong government backing and nationwide distribution network provide competitive advantage.
• Integrated operations across refining, pipelines, and marketing ensure scale and resilience.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive accumulation between ₹150–₹160.
• Long-Term Holding: Suitable for income-focused investors due to dividend yield and stable operations, though growth is cyclical.

✅ Positive

• Quarterly profit growth of 1,016% highlights strong recovery.
• Dividend yield of 3.11% provides steady income.
• FII (+0.21%) and DII (+0.13%) holdings increased.

⚠️ Limitation

• ROE and ROCE remain modest compared to industry leaders.
• Debt-to-equity ratio of 0.74 indicates moderate leverage risk.
• PEG ratio negative, reflecting volatile earnings trend.

📉 Company Negative News

• Profitability remains cyclical, dependent on crude oil prices and refining margins.
• High volatility in earnings may impact investor confidence.

📈 Company Positive News

• Strong quarterly profit surge.
• Institutional investors increased holdings.
• Technical support near DMA 200 (₹151) provides stability.

🏭 Industry

• Industry PE at 11.3 suggests IOC trades at a slight discount.
• Oil & gas sector benefits from rising demand and government infrastructure push.
• Peers with stronger margins trade at higher multiples, highlighting IOC’s relative undervaluation.

🔎 Conclusion

IOC remains a fundamentally stable, dividend-paying company with strong government backing and nationwide presence.

While profitability is cyclical and margins modest, valuations are reasonable compared to industry peers.

Accumulation near ₹150–₹160 is recommended for long-term investors seeking stable returns and exposure to India’s energy sector.