Shares of Indian Oil Corporation Ltd (IOC) gained over 1% on Thursday after the company came up with a new unit for the renewable energy business on Wednesday.
The company in an exchange filing said the board has accorded approval for formation of a wholly owned subsidiary in India, subject to approval of NITI Aayog, DIPAM etc., to operate in the domain of low carbon, new, clean and green energy businesses.
To meet the operational requirements of the net zero goal and beyond, the proposed fully owned subsidiary will concentrate on and pursue the business of low carbon and green energy.
Also, the company plans to set up green hydrogen plants at all its refineries as part of a ₹2-lakh crore green transition plan to achieve net-zero emissions from its operations by 2046.
“The step by Indian Oil to consolidate green initiatives into a single entity is a welcome step as it will help unlock the value hidden in the Indian Oil balance sheet of existing and future green initiatives such as renewable power, hydrogen, bio fuels, EV etc,” said Anshuman Khanna - Director, ValPro and Enablers.
According to Khanna, the Indian Oil stock remains under pressure owing to the uncertainties around pricing of retail fuels on account of socio-political considerations. However, a segregation of green initiatives into a separate entity which is untouched by such uncertainties would enable capturing the value of such initiatives to the fullest. This entity can also be demerged and separately listed in the future thereby creating values for IOC shareholders as well.
On the technical front, many analysts believe that the stock could rally till ₹86, while the support level for the stock is ₹77 and the resistance level is ₹85. The stock's weekly average delivery volume is 50.76%.
“Oil marketing companies have witnessed good buying interest as crude oil has corrected sharply. The stock can witness an upmove in the short term towards ₹83-84,” said Ruchit Jain, lead research, 5paisa. com.
According to Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One, IOC has been gaining traction from the past couple of trading sessions, and is currently hovering above the 21-double exponential moving average (DEMA) on the daily chart, signifying inherent strength.
“On the technical front, the support is placed around 77-odd levels, which is the recent swing low. And on the flip side, a decisive closure above 81 could initiate the next leg of rally in the comparable period,” added Krishan.
According to a Mintgenie poll, 31 analysts on an average recommend 'buy' rating for the stock.