IOC slips and recovers

Indian Oil Corporation yesterday had hit a new 52-week low at Rs.186.20 and today though it is not at this low, it remains in the red. It has recovered from an earlier over 3% fall to now a less than a25 drop.

The stock is down on this untimely decision of the Govt to divest 10% stake in the company. This is probably the worst time for IOC to sell stake given the state of the stock markets, rupee volatility and the huge mound of under-recoveries. This will surely undervalue the stock .

Surely better sense will prevail and the Govt might delay the issue though it needs to necessarily happen in this month of August to meet SEBI’s minimum float deadline. Maybe once the Govt is also able to announce the amount of subsidy to be given to the OMCs and also states the subsidy sharing mechanism, then maybe with clarity setting in, getting the right valuation would also be possible.