The state oil PSUs have not been able to deliver long term wealth to investors; not even after 1 long 10 years of liberalization of fuel prices unleashed by the then Manmohan government. It will be a separate research paper to discuss all of those in detail.
IOC is available around 5-10 PE at current levels. It is making profit and likely to do so over the period of next 5 years as the Modi govt does not seem to like losses and keeps on inching up fuel prices even in the face of global decline in petroleum crude oil.
We are not looking into 25 years long horizon but over 5-10 years, even in the face of decline in topline (which is a whopping 5 lack crore, the highest of a company in India, followed by only RIL) the company will be able to make profits due to the ‘make profits’ policy of the incumbent government and its nationwide distribution network which could be used for future growth if the economy is transitioning into gas or electric automobile based transportation trend.
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