Indian Oil shares gets upgraded by Brokerage firm, raises stock price target

Brokerage firm Jefferies has upgraded Indian Oil Corporation (IOC) Ltd, the largest state-run downstream oil refiner in India, from a "hold" rating to a "buy." The firm has also increased its price target for Indian Oil from Rs 165 to Rs 185. This revised price target suggests a potential upside of 31% from Thursday's closing price.

Currently, shares of Indian Oil are down 30% from their recent peak of Rs 196, although they have recovered from November lows of Rs 129.

According to Jefferies, Indian Oil has the highest refining-to-marketing volume ratio among its public sector oil marketing company (OMC) peers, making it the biggest beneficiary if refining margins improve. The firm also noted that refining is expected to accelerate in 2025 due to accelerated capacity closures and healthy demand.

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The brokerage also said that the recent correction in Indian Oil's stock price has turned favorable after a correction of nearly 20% in the last three months until November. Shares of Indian Oil are now trading at a steeper 70% discount to the Nifty 50 index, compared to its long-term average of 57%, according to Jefferies.

Out of the 34 analysts that have coverage on Indian Oil, 16 of them have a "buy" rating, seven of them say "hold", and 11 of them have a "sell" recommendation. Shares of Indian Oil ended 1.1% lower on Thursday at Rs 141.6. The stock is up only 8% so far in 2024.

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