Name: Berkshire

Stock: Indian Oil Corporation Limited

Our Recommendation

 Fair Value: 208

 Rating: Buy
 Risk Rating (Using Altman’s Z Score): Safe
 Industry overview
MARKET SHARE
1. India retained its spot as the third largest
consumer of oil in the world in 2017 with
consumption of 4.69 thousand barrels per day
.2. India was the fourth-largest Liquefied Natural
Gas (LNG) importer in 2017 after Japan, South
Korea and China. LNG imports increased to
26.11 bcm in 2017-18 from 24.48 bcm in 2016-17.
3. Oil imports rose sharply to US$ 87.37 billion in
2017-18 from US$ 70.72 billion in 2016-17.
INVESTMENTS
1. The petroleum and natural gas sector
attracted FDI worth US$ 7.00 billion between
April 2000 and December 2018.(as per
Department of Industry Policy and Promotion).
1.2. Foreign investors will have opportunities to
invest in projects worth US$ 300 billion in India,
as the country looks to cut reliance on oil
imports by 10 per cent by 2022, according to Mr
Dharmendra Pradhan, Minister of Petroleum
and Natural Gas, Government of India.
2.3. Oil and Natural Gas Corporation (ONGC) is
going to invest Rs 17,615 crore (US$ 2.73 billion)
on drilling oil and gas wells in 2018-19.
3.4. In September 2018, the Government of
Gujarat selected Energy Infrastructure Limited
(EIL), a subsidiary of the Netherlands-based
Energy Infrastructure Butano (Asia) BV, to set up
a Liquefied Petroleum Gas (LPG) terminal at
Okha with an investment of Rs 700 crore (US$
104.42 million).
Government initiatives
1. The Government of India is planning to set up
around 5,000 compressed bio gas (CBG) plants
by 2023.
2. Government of India is planning to invest Rs
70,000 crore (US$ 9.97 billion) to expand the gas
pipeline network across the country.
3. State-run oil firms are planning investments
worth Rs 723 crore (US$ 111.30 million) in Uttar
Pradesh to improve the liquefied petroleum gas
(LPG) infrastructure according to Mr
Dharmendra Pradhan, Minister of Petroleum
and Natural Gas, Government of India.
4. The Oil Ministry plans to set up bio-CNG
(compressed natural gas) plants and allied
infrastructure at a cost of Rs 7,000 crore (US$
1.10 billion) to promote the use of clean fuel.
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Share price vs. Brent

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Stock price

Recent drop in stock price was escalated due to recently applied cess of 1%.

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