Jefferies has upgraded Indian Oil Corporation Limited (IOCL) to a Buy rating with a target price of ₹185, citing improving refining fundamentals and attractive valuations after a 20% correction in the stock over the past three months.
Key highlights from the report:
- Refining outlook: The refining business is expected to strengthen in CY2025 due to accelerated global capacity closures and sustained healthy demand.
- Leverage to refining margins: Among oil marketing companies, IOCL stands out with the highest refining-to-marketing ratio, making it the most leveraged to benefit from margin improvements.
- Valuation attractiveness: IOCL now trades at a steeper discount to the Nifty compared to its long-term average, offering a favorable risk-reward proposition.
The brokerage believes that the refining tailwinds, coupled with IOCL’s positioning, make the stock a compelling buy for 2025.
