Indian Oil Share Price: Morgan Stanley maintains overweight; projects EBITDA nearly doubling by FY28

Indian Oil Corp Share Price: Morgan Stanley has reiterated its positive stance on Indian Oil Corporation (IOCL), maintaining an “Overweight” rating on the stock and setting a target price of Rs 219. The brokerage has also identified the company as a tactical idea, with the share price expected to rise in absolute terms over the next 15 days.

The constructive view is in the context of what Morgan Stanley calls a “visible turnaround” in key operating metrics.

IOCL is turning around on fuel market share, and this is driven by improved refinery productivity and better capital allocation.

According to the brokerage, this is setting the stage for earnings momentum in the medium term.

One of the key supporting pillars of the investment thesis is earnings growth. Morgan Stanley projects that IOCL’s EBITDA is expected to almost double by FY28, driven by both structural and execution-related factors.

The brokerage house has identified a potential USD 20 billion value creation opportunity.

Among the most important drivers identified is the expected gain of 250 basis points in fuel market share.

This is expected to enhance the competitive advantage of IOCL in the ever-changing domestic fuel market.

In addition to it, the sensitivity of the company to discounted fuels is also considered to be a factor that could enhance its profitability, despite the fluctuations in global energy prices.

Another key theme in the report is capital discipline. Morgan Stanley highlights the optimisation of capital allocation as a key driver of improved returns and maintaining a strong balance sheet.

In this context, the report also identifies the downstream gas value as a significant contributor to earnings growth, thus diversifying IOCL’s revenue base and supporting its integrated business model.

On valuations, the brokerage notes that IOCL currently trades at 1.1 times price-to-book (P/B). Historically, this level has acted as a cap for the stock.

However, Morgan Stanley believes emerging evidence of operational turnaround and stronger earnings visibility could challenge this ceiling, potentially paving the way for a re-rating.

In the near term, the tactical call suggests scope for upside over the next two weeks, while the broader thesis hinges on market share gains, efficiency improvements and disciplined growth translating into substantial value creation over the next few years.

With EBITDA expected to nearly double by FY28 and multiple catalysts in play, Morgan Stanley’s reaffirmed Overweight stance signals continued confidence in IOCL’s growth trajectory.

While writing this report (9:22 AM) after market opening, the shares of IOCL were up by 0.71 per cent to trade at Rs 177.70. The previous closing scrip was Rs 176.45.

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