Indian Oil Corporation (IOC) is one of the largest oil companies in India that has four major operations –
- Production
- Refining
- Supply of petroleum products.
IOC accounts for 32% of India’s total refining capacity.
The oil giant manages a large network of 11 refineries across the nation, collectively having a total capacity of around 80.60 MMTPA (Million Metric Tonnes Per Annum).
IOC has 47% of revenue generated from Diesel sales followed by Petrol and other petroleum products.
Let’s discuss what the IOC share price would be by 2025.
IOC Share Price Target 2025
Indian Oil Corporation’s stock is currently trading around Rs 91-92. Over the past 3 years, the average annual return has been 16% along with a high dividend payout of 46%.
Analysts expect IOC’s stock can reach 115 by 2025 due to solid fundamentals, and an expected rise in petroleum products usage that will lead to better profits.
Fundamental Analysis of IOC
IOC being a government-run company is fundamentally strong and considered a safer bet and in the last 1 year, the stock has given a 29% return.
But the company has given a -2% return in the last 5 years because the stock price plunged drastically during the March 2020 market crash and now it has started recovering for the last 1-year, as per the market analysts.
I. Revenue growth:
According to the IOC’s Annual Report 2022-23, the company’s revenues increased by 65.7% compared to the previous year.
However, the stock price still fell despite the increase in revenue because the profits of the oil giant fell considerably despite the increase in the revenues. Let’s discuss that in the next part.
II. Profit growth:
IOC’s profit is a topsy-turvy ride. However, it has shown a tremendous profit growth post-COVID for two consecutive years.
But the operating profit went down 34.7% in 2022-23 as compared to the previous year. The net profit has further declined as well by 54.5%.
IOC Share’s Technical Analysis
Alongside understanding the basics of IOC’s performance, another important aspect is looking at how the share prices move – this is called technical analysis. Let’s discuss that.
Current trend: When you look at IOC’s stock trend, you can notice it has been moving up in the past 12 months, showing a strong upward trend. The price has been consistently going higher and higher (except for a sudden fall in July 2023), which is a good sign.
Exponential Moving Average 200 (EMA200): Now, let’s talk about a tool that’s often used to understand long-term trends and important levels of support and resistance. Right now, IOC’s share price is at around 92, which is way above the EMA 200 value of 67.
Relative Strength Index (RSI) is also showing a strong buy signal with 62 points.
Major Risks of Investing in IOC Shares
- Global Oil Price Volatility: IOC’s financial performance is heavily influenced by changes in global crude oil prices. Ups & downs in Crude oil prices can impact the company’s profitability and revenue, affecting its stock price.
- Regulatory Changes: Government regulations and policies in the energy sector can significantly impact IOC’s operations and profitability. Any change in taxes, subsidies, or pricing can affect the company’s financial outlook.
- Economic Conditions: Economic downturns and recessions can lead to reduced demand for petroleum products, affecting IOC’s sales and revenues.
- Geopolitical Risks: Geo-political tensions, conflicts, and disruptions in oil supply can lead to supply chain disruptions, affecting IOC’s operations and financial performance.
- Energy Transition: IOC may face challenges in aligning its business model with the evolving energy landscape such as renewable energy sources, potentially impacting its growth potential.
Conclusion
The IOC shares haven’t given any good return in the last 5 years. But if you look at the past 2 years’ performance, the stock has picked the momentum.
As per the experts’ opinion, IOC’s share price target can be around 115 by 2025. IOC’s profitability is the major issue but that is a universal concern with most government-backed oil companies.
Anyways, you must do your own research and seek professional experts before making any investment decisions.
You can also read about other stocks’ target prices –
- Tata Power Share Price Target
- IRCTC Share Price Target
- Adani Power Shares Target Price
- Yes Bank Share Price Target
FAQs
Indian Oil Corporation (IOC) is a major oil company in India that is engaged in refining, distributing, and marketing petroleum products.
IOC’s financial health influences its potential growth and stability. IOC has inconsistent financials that leads to mixed returns.
Technical analysis uncovers the current price trends and patterns, offering insights into potential share price movements.
IOC’s financial performance is sensitive to changes in global crude oil prices. For example, a rise in crude oil prices can impact primary costs resulting into less profitability.
