On May 5, 2025, shares of Indian Oil Corporation Ltd. (IOC) experienced a notable surge, rising by ₹5.05 or 3.52% to reach ₹148.33 in early trading. This increase was fueled by strong buying interest in public sector undertakings (PSUs) and energy stocks, reflecting a broader optimism in the market. The stock opened at ₹145.00 and hit a high of ₹149.60 before stabilizing around the ₹148 mark. As of 9:42 AM, the previous close was ₹143.28, and the day’s trading range was between ₹144.75 and ₹149.60.
IOC's market capitalization stands at ₹2.09 lakh crore, with a price-to-earnings (P/E) ratio of 15.03 and a dividend yield of 8.09%. The stock has shown a 52-week range between ₹110.72 and ₹185.97, indicating its volatility and potential for growth.
Several factors are driving the positive momentum for IOC. Analysts point to the attractive dividend yield, which exceeds 8%, as a significant draw for income-seeking investors. The oil and gas sector is currently witnessing fresh inflows from foreign institutional investors (FIIs), bolstered by favorable global crude prices that support downstream oil marketing companies like IOC. A technical analysis indicates that the stock has broken through a key resistance level at ₹145, which is now seen as support, inviting further buying interest.
In addition to its stock performance, IOC recently reported a significant surge in net profit for the fourth quarter (Q4) of FY25, driven by improved refining margins and steady demand for petroleum products. The company’s net profit reached ₹7,265 crore, a sharp increase from ₹2,874 crore in the previous quarter. This remarkable performance was complemented by a 91% sequential jump in EBITDA to ₹13,572 crore, reflecting the strength of both the refining and marketing segments.
Despite the government raising excise duties on auto fuels, IOC managed to maintain supernormal marketing margins, particularly on petrol and diesel, which significantly lifted its operating profitability for the quarter. Total revenue for the company remained broadly flat at ₹1.95 lakh crore, while EBITDA margins expanded to 7% from 3.7% quarter-on-quarter.
Following the earnings announcement, CLSA raised its target price for IOC to ₹135 from ₹120 while maintaining a ‘Hold’ rating. Analysts have highlighted the stock’s attractive valuation, healthy dividend yield, and strong operational metrics as key reasons to consider adding IOC to a diversified investment portfolio. The positive sentiment among investors is reflected in the stock's performance over the past month, which has outpaced several peers in the sector.
However, analysts caution that while the outlook for IOC remains constructive, sector-specific risks such as fluctuations in crude oil prices and potential regulatory changes could impact future profitability. The recent rally in IOC’s stock price may have already priced in much of the positive earnings surprise, and a further re-rating would require sustained capital efficiency and diversification gains.
As the market continues to react to IOC’s strong quarterly results and the attractive dividend announcement, the company is reinforcing its status as a leading player in the public sector. Investors looking for stability and growth in the energy sector may find IOC to be a prudent choice, especially given its ability to deliver shareholder value while navigating industry challenges.
Looking ahead, investors are advised to keep an eye on crude oil price movements, global demand trends, and any changes in government fuel pricing policies that could affect the sector's performance. The upcoming Q4 results and FY25 dividend payout timeline will also be crucial for assessing IOC’s ongoing commitment to rewarding its shareholders.
In summary, the combination of IOC’s robust financial performance, appealing dividend yield, and positive market sentiment positions it favorably for investors. The company’s operational strength and government backing further enhance its attractiveness in the public sector, making it a noteworthy option for those seeking a balanced approach to income and capital appreciation.
