Shares of government-owned oil marketing company, Indian Oil Corporation Limited (IOCL) breached the Rs 100 level to hit a fresh 52-week high of Rs 101.25 apiece in Friday's trade, as the board of the company will consider fundraising plans through rights issue of equity shares later in the day.

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IOC shares climbed 2.63 per cent to hit a fresh one-year high of Rs 101.25. With this, the PSU stock is up 26.73 percent so far this year and 36 percent in the last one-year period. The stock has an average share price target of Rs 102.29, according to data from Trendlyne. The consensus estimate represents an upside of 3.48 percent from the last price of 98.85.

The state-owned oil refiner's proposed rights issue is seen strengthening its capex spending and the credibility of its emission-reduction plans. IOC's rights issue, if considered, will be subject to various statutory approvals as may be required, the oil company said in a statement.

The government, which is the majority owner of the company, is likely to subscribe to the rights issue and infuse equity in the company.

Recently, Fitch Ratings said that capital raising plans of Oil Marketing Companies (OMCs), including IOC, should strengthen their capex spending and the credibility of their emission-reduction plans. An injection of capital from the government would provide further evidence for assumption that the OMCs would receive extraordinary sovereign support if needed, the key factor underpinning their stable ratings, the credit rating agency said.

OMCs have suffered significant losses in the first half of previous fiscal FY23 on the back of high crude oil prices amid Russia's invasion of Ukraine. Shares of OMCs have surged lately as fund raising plans of the companies have enthused investors.

In the last one-month period, shares of state-owned oil refiners — Bharat Petroleum Corporation Ltd, IOC, Hindustan Petroleum Corp Ltd — have risen 10-16 percent and around 18-33 percent during the past three months.

BPCL's board of directors had on June 28 approved a proposal for raising capital upto an amount not exceeding Rs 18,000 crore through rights issue.

There is an expectation that HPCL will also come up with a proposal for an equity issue. The company is said to be looking at a preferential share allotment to the government.

(Edited by : C H Unnikrishnan)

First Published:Jul 7, 2023 1:32 PM IST