Why is I O C L falling/rising?

Short-Term Price Movement and Market Context

On 28 November, IOCL’s stock price declined by ₹2.00, representing a 1.22% drop. This follows a two-day consecutive fall, during which the stock lost 2.27% in value. The recent underperformance is also evident when compared to its sector, with IOCL lagging by 1.12% today. Over the past week, the stock has declined by 3.26%, while the Sensex benchmark index gained 0.56%, indicating a divergence from broader market trends in the very short term.

Technical indicators reveal that the stock is trading above its 50-day, 100-day, and 200-day moving averages, signalling a generally positive medium- to long-term trend. However, it currently trades below its 5-day and 20-day moving averages, suggesting some short-term selling pressure or consolidation. This technical setup often reflects a temporary pause or correction within an overall upward trajectory.

Investor participation has notably diminished, with delivery volume on 27 November falling sharply by 64.3% compared to the five-day average. This decline in trading activity may contribute to the recent price softness, as lower volumes can amplify price swings and reduce liquidity, even though the stock remains sufficiently liquid for sizeable trades up to ₹3.26 crores based on recent averages.

Robust Financial Performance Underpinning Long-Term Growth

Despite the recent price softness, IOCL’s fundamentals remain strong and supportive of its valuation. The company has demonstrated healthy long-term growth, with net sales increasing at an annual rate of 14.63% and operating profit expanding by 28.19%. These figures highlight the firm’s ability to grow revenue and profitability steadily over time.

Quarterly results for September 2025 further reinforce this positive outlook. The company reported a profit after tax (PAT) of ₹7,817.55 crores, marking a remarkable 105.8% increase compared to the average of the previous four quarters. Operating profit to interest ratio reached a high of 7.16 times, indicating strong earnings relative to debt servicing costs. Additionally, the company’s PBDIT (profit before depreciation, interest, and taxes) hit a record ₹16,245 crores, underscoring operational efficiency and robust cash flow generation.

IOCL’s return on capital employed (ROCE) stands at 10.6%, reflecting effective utilisation of capital to generate profits. The enterprise value to capital employed ratio of 1.1 suggests the stock is attractively valued relative to its peers, trading at a discount to historical averages. Over the past year, the stock has delivered a 17.38% return while profits surged by 48.6%, resulting in a low PEG ratio of 0.2, which often signals undervaluation relative to growth prospects.

Institutional investors hold a significant 37.7% stake in the company, indicating confidence from sophisticated market participants who typically conduct thorough fundamental analysis. Furthermore, IOCL ranks among the top 1% of companies rated by MarketsMojo out of over 4,000 stocks, reflecting its strong market standing and consistent performance.

Consistent Outperformance Over Multiple Time Horizons

IOCL’s stock has demonstrated remarkable resilience and growth over longer periods. Year-to-date, the stock has gained 18.59%, outperforming the Sensex’s 9.68% rise. Over one year, the stock’s return of 17.38% nearly doubles the benchmark’s 8.43%. The company’s three-year and five-year returns are even more impressive, at 112.41% and 189.86% respectively, significantly outpacing the Sensex’s 37.12% and 94.13% gains. This consistent outperformance highlights IOCL’s ability to generate shareholder value over time, despite short-term volatility.

Such sustained returns, combined with strong profit growth and attractive valuation metrics, suggest that the recent price decline is more likely a temporary correction rather than a fundamental shift in the company’s prospects.

Conclusion: Temporary Price Pressure Amid Strong Fundamentals

The recent decline in Indian Oil Corporation Ltd’s share price on 28 November appears to be driven primarily by short-term technical factors and reduced investor participation rather than any deterioration in the company’s underlying business. While the stock has underperformed the sector and broader market in the last few days, its long-term growth trajectory remains intact, supported by robust quarterly earnings, attractive valuation, and strong institutional backing.

Investors should consider the stock’s consistent outperformance over multiple years and its solid financial metrics when evaluating the recent price movement. The current dip may offer a buying opportunity for those focused on the company’s fundamentals and long-term potential rather than short-term market fluctuations.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →