Is it right time to buy IOC after Buyback @149?

is it right time to buy ioc

With a 33,000-plus work-force, extensive refining, distribution & marketing infrastructure and advanced R&D facilities, lndianOil plays a significant role in fuelling the socio-economic development of the country. With a mandate to ensure India’s energy security and self-sufficiency in refining & marketing of petroleum products, lndianOil has in the past six decades provided energy access to millions of people across the length and breadth of the country through its ever-expanding network of over 47,800 customer touch-points.

Fundamentally, IOC stock should be considered as one of the top pick for long-term. But after Cases like Gitanjali Gems and Vakrangee, Institutional Investors have again started picking only those stocks which are not connected to any big uncertainty or belongs to Good Quality Management. With IOC, the problem is that it earns only Rs 2–2.50 ( reduced from Rs 3–3.50 by Government) on sale of 1 litre of petrol or diesel.

Frankly speaking, it doesn’t looks quite high when you know that petrol prices are around Rs 70–80. Like recent action, Government may take more actions if Crude Oil reaches to some serious levels like $90/barrel. However, crude oil is currently trading around $60/barrel levels. So, there is no problem for OMCs in Short term. But it doesn’t mean that Crude Oil now can’t rise again! A major supply cut by OPEC will again boost Crude Oil prices and it will again creates problem of High petrol prices which could be then transferred to the accounts of IOC again to handle some of the losses. Therefore, most of the Big Investors are not willing to buy OMCs like IOC for long-term.

Now, taking recent announcements by IOC board into account, I think Dividend and Buyback is coming for just Government and retail or institutional investors will not get any significant thing from this Buyback. Like those one Buybacks which are approved to reward Shareholders, it is coming with a aim of just fulfilling the requirements of Government and not of any other minority shareholder. Therefore, it is not that kind of positive which maybe seem to some Investors.

Is it right time to buy IOC Share?

But yes, for short term, you will be able to see some speculation activities by Institutional Investors in OMCs stocks. In my view, I think it is possible to see IOC going towards Rs 148-152 in next few days. But overall, you should use such possible speculations as an good opportunity.



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