Saturday, December 4, 2010

FPO ANALYSIS: INDIAN OIL CORPORATION – UN MATCHED REACH AND NET WORK - INVEST








The oil marketing behemoth – Indian Oil Corporation will be hitting the market shortly with an follow-on-public offer (FPO). Government will be divesting another 5% stake in the company. The pricing which is very crucial for FPOs, would be attractive, considering the pricing decision taken by the government in the highly successful Coal India IPO and the Power grid FPO.




BUSINESS:


IOC is country’s flagship national oil company with business interests comprising the entire hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum products to exploration & production of crude oil & gas, marketing of natural gas, and petrochemicals. It is the leading Indian corporate in the Fortune 'Global 500' listing, ranked at the 125th position in the year 2010.

The operations of IOC are strategically structured along business verticals - Refineries, Pipelines, Marketing, R&D Centre and Business Development – E&P, Petrochemicals and Natural Gas. To achieve the next level of growth, IOC is currently forging ahead on a well laid-out road map through vertical integration- upstream into oil exploration & production (E&P) and downstream into petrochemicals – and diversification into natural gas marketing and alternative energy, besides globalization of its downstream operations.

FINANCIALS:
RS IN CRORES


31-03-09

31-03-10

30-09-10

NET SALES

264304.00

250890.44

141419.40

NET PROFIT

   2949.55

 10220.55

   1905.56

CAPITAL

   1192.37

  2427.95
 
   2427.95

EPS (Rs)

      24.30

      42.10

        7.85





STRENGHTS:



  • Unmatched reach and net work – IOC and its subsidiary account for over 48% petroleum products market share, 34.8% national refining capacity and 71% downstream sector pipelines capacity in India.

  • Popular energy brands - includes Indane LPGas, SERVO lubricants,     XtraPremium petrol, XtraMile diesel.

  • World class R&D Center-IndianOil has a sprawling world-class R & D, perhaps Asia's finest. The Centre holds 215 active patents, including 109 international patents.


  • Presence in petrochemicals- has a full slate of products including Linear Alkyl Benzene (LAB), Purified Terephthallic Acid (PTA), and an extensive range of polymers. IndianOil holds a significant market share of LAB in India and exports to 19 countries.


  • Foray into oil Exploration and Production -Indian Oil’s domestic portfolio includes 11 oil and gas blocks and 2 CBM blocks in India including 2 blocks awarded to IOC and its consortium partners under NELP-VIII.

  • Natural Gas - is another thrust area for IndianOil with special focus on City Gas Distribution (CGD) business. The Corporation has entered into franchise agreements with several CGD players to market Compressed Natural Gas through its retail outlets. Indian Oil’s joint venture with GAIL India Ltd. - Green Gas Ltd. – has been authorized to take up city gas distribution at Agra. A long term gas supply agreement has been signed with NTPC.
  • MoU with Tamil Nadu Industrial Development Corporation Ltd. (TIDCO) to set up a 2.5 million tonnes per annum LNG import and re-gasification terminal & gas-based power plants at Ennore, and gas pipelines for distribution in the state of Tamil Nadu.

  • Venturing into alternative fuels -forayed into alternative energy options such as wind, solar, bio-fuels and nuclear power.

  • IndianOil has the largest captive plantation – over 1,000 hectares – for bio-fuel production.




  • As a leading public sector enterprise of India, IndianOil has successfully combined its corporate social responsibility agenda with its business offerings, meeting the energy needs of millions of people everyday across the length and breadth of the country.



RECOMMENDATIONS:

The company financials are sound. Company’s margins will get a boost as and when the petroleum product prices are going to be deregulated. Currently the shares are trading around Rs 385/- Pricing is very crucial in FPOs. The government will price the issue appropriately, leaving something for the retail investors.  Good long term bet. Invest

5 comments:

  1. I shall go ahead with pooling up and earmarking funds. However, I request you to take a fresh view and publish your Advice, after price announcement.

    (K V Subba Rao)

    ReplyDelete
  2. Once the price range is announced, recommendations will be reviewed.

    ReplyDelete
  3. Sir, is it advisable to buy IOC at current levels (377 rs) as govt. said that the price would be around 450 rs?

    ReplyDelete
  4. By during FPO time, there will be price correction then. The issue will not be at Rs 450/-

    ReplyDelete
  5. I found this post very informative from trading point of view. Got to learn good facts here. Traders can learn live updates on stock market by following epic research as well.

    ReplyDelete