1) Indian Oil Corporation Ltd (Market Price: 117.65 Rs, Target Price: 150 Rs.)
About IOC : Indian Oil Corp. Ltd. is a holding company, which engages in refining, pipeline transportation, and marketing of petroleum products. It also explores and produces crude oil and gas; and markets natural gas and petrochemicals. It operates through the following business segments: Petroleum Products, Petro-Chemicals, and Other Businesses. The Other Businesses segment covers the sale of gas, explosives, and cryogenics; wins mill and solar power generation; and oil and gas exploration activities. The company was founded on June 30, 1959 and is headquartered in New Delhi, India.
a) IOC has a 7.68% dividend yield and the better dividend is expected as India’s fiscal deficit has widened and Government seeks Rs 19000 crore dividend from oil companies a few days back, which may benefit the individual investors as well.
b) Brent crude is at $54.50 pb so OMCs will benefit the most in terms of low COGS.
c) Stock is trading at 0.98 times its book value.
d) ROCE: 15.87 % | ROE: 15.36 %
e) Stable topline and better quarter numbers are expected due to lower input cost.
2. Coal India Ltd (Market Price: 184.65 Rs, Target Price: 270 Rs.)
Noted: I have given a target of 270 Rs . as CLSA retains buy on Coal India, target price Rs 270 .
About Coal India : Coal India Ltd. is a holding company, which engages in the production and sale of coal. Its products and services include coking coal, semi coking coal, non-coking coal, washed and beneficiated coal, middlings, rejects, coal fines and coke fines, tar, heavy oil, light oil, and soft pitch. The company was founded in June 14, 1973 and is headquartered in Kolkata, India.
Why COAL INDIA
a) Coal India has 7.08% dividend yield a Maharatna company.
b) Coal India will continue to be India’s biggest coal supplier even after the government’s decision to throw open the sector to private players through an ordinance.
c) The company has extraordinary fundamentals. ROCE: 109 % | ROE: 74.90 % | Interest Coverage Ratio: 78.64 | Inventory turnover ratio: 16.55 | Pledged percentage: 0.00 % | Working capital: 33,935 Cr. | Free cash flow 5years: 46,575 Cr.
d) The company is virtually debt-free.
e) Stock is highly undervalued. The intrinsic value of the stock is 335 Rs and the market price is 184 Rs. (81% upside potential is expected).
f) Effective topline.
3) NTPC Ltd (Market Price: 115.60 Rs, Target Price: 152 Rs.)
Noted: I have given a target of 152 Rs . as Morgan Stanley overweight on NTPC, target price Rs 152.
About NTPC: NTPC Ltd. engages in the electric power generation by coal-based thermal power plant. It operates through the following two segments: Generation of Energy and Others. The Generation of Energy segment involves in the generation and sale of bulk power to State Power utilities. The Others segment includes provision of consultancy, project management and supervision, energy trading, oil and gas exploration, and coal mining. The company was founded on November 7, 1975 and is headquartered in New Delhi, India.
a) NTPC has a 5.25% dividend yield.
b) NTPC became a Maharatna company in May 2010.
c) Growing cash from operating activity indicates the book value may significantly improve from current levels.
e) The golden cross indicates the stock could be on the fresh breakout.
1) Novel coronavirus didn’t affect India, Crude is stable, IPC new measures, FIIs are bullish, Quarter numbers, are excellent, US-China trade war is cooling down, GST Council decision of tax cut and Corporate tax cut. These factors may push the market to higher levels.
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