I O C L (IOC)

FairStock Score: 88/100 — HIGH CONVICTION

Score breakdown: P/E: 3/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• P/E of 7.40 and P/B of 1.04 are cheap on historical metrics, with price near book value of ₹139.57.
• ROE of 18.71% and latest quarter net profit of ₹13,502 Cr indicate strong recent profitability, aided by the 156.07% profit growth.
• Graham Number of ₹282.04 and PEG of 0.59 point to valuation headroom if earnings remain reasonably stable.
• Dividend yield of 2.67% plus promoter holding of 51.50% provides income and governance stability.
• Piotroski F-Score of 7/9 and free cash flow of ₹2,851 Cr suggest decent financial health despite modest current ratio.

Concerns

• DCF intrinsic value of ₹108.08 is below the current market price of ₹145.50, implying limited cash-flow-based margin of safety.
• EV/EBITDA of 221.93 is extremely high, making operating-level valuation very stretched.
• Current ratio of 0.92 indicates short-term liabilities exceed current assets, so working capital needs monitoring.
• Sales growth of only 1.37% and ROCE of 7.36% highlight the cyclical, capital-intensive nature of refining and marketing.

AI Analysis

When I examine IOCL, my first thought is that the price is interesting, but the business is cyclical. At ₹145.50, the stock sells at 7.40 times earnings and 1.04 times book value, close to the book of ₹139.57. With a dividend yield of 2.67%, I am being paid to wait. The latest quarter shows sales of ₹2.05 lakh Cr and a net profit of ₹13,502 Cr; the 156.07% jump in profit is eye-catching. Yet sales growth is only 1.37%, so the earnings surge is more likely from the refining cycle and inventory effects than from sustainable organic expansion. The five-year revenue CAGR of 15.81% tells me the asset base has grown, but ROCE of 7.36% reminds me that this is a capital-hungry business. ROE of 18.71% is flattered by leverage; debt-equity is 0.74, and current ratio is 0.92, so liquidity is not very comfortable. Free cash flow is positive at ₹2,851 Cr, and a Piotroski score of 7 out of 9 supports decent financial health. The Altman Z-score of 2.76 is acceptable. Valuation is divided: Graham Number of ₹282.04 and PEG of 0.59 suggest considerable margin of safety, and the stated margin of safety is 33.53%. But the DCF intrinsic value of ₹108.08 sits below the current price, and EV/EBITDA of 221.93 makes me wary of operating-level valuation. This is a cyclical firm with a government parent at 51.50% holding, not a compounding stalwart. I would only own it at a meaningful discount to intrinsic value, with eyes on crude and refining margins.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer