IOC recovered from its low of Rs 380 today as the market expects the giant oil refiner to turn out spectacular results for the quarter ended 31 March 2003.

By 11:35 IST, in fact, the scrip of Indian Oil Corporation (IOC) had leaped up 3.92% to Rs 407 on BSE. Over 3.23 lakh IOC shares were recorded on BSE thus far. The scrip has now risen 73.2% from Rs 235 on 30 April 2003.

The stock seemed to have taken in its stride an earlier weakness that was prompted by reports that Sebi would be probing an issue of insider trading in a few stocks including IOC.

In fact, the market regulator has issued letters to some 15 mutual funds seeking details about investors who have an interest of more than Rs 10 lakh in any scheme of the respective MFs with IOC and some other stocks in their portfolio. But sustained buying by FIIs on the IOC counter brought the stock strongly ahead again.

Dealers say front running is taking place on the IOC counter ahead of its results for the period ended 31 March 2003. The results are slated for 23 July 2003.

The market reckons that the company will turn out an impressive performance. It is also anticipating a huge dividend pay-out from the usually generous oil refiner, of around Rs 40 per share (400% on a face value of Rs 10) for FY 2002-03.

The market is moreso upbeat about IOC after refining peer BPCL beat expectations and turned out an excellent performance. But oil and refinery analysts are not as upbeat as the market is, as indicated in their expectations for IOC - a 58-70%% fall in net profit to Rs 400-550 crore on a 11-20% rise in net sales to Rs 31,250-34,000 crore for the quarter ended 31 March 2003.

Earlier, the company recommended a 1:2 bonus issue of equity shares to shareholders - one new share for every two existing equity shares. When the bonus issue is concluded, the company's equity base will increase to Rs 1,168.02 crore from the current Rs 778.68 crore.

Fundamentally, IOC looks very strong. It has 10 refineries and 22,000 petrol pumps, representing 42% of the total refining capacity and 53% of petroleum product sales in India. IOC owns 6,523 km of crude and product pipelines in India.

IOC's huge investment of Rs 4,280 crore in shares of oil companies is also expected to earn it huge dividends. The company has invested in shares of ONGC, Gas Authority of India (GAIL), IBP, Chennai Petroleum and Bongaigaon Refinery at historically low prices. All these companies have posted record profits and announced fat dividends.

For the third quarter ended 31 December 2002, IOC recorded a 37% increase in net profit to Rs 776.56 crore (Rs 567.79 crore) on a 10% rise in net sales to Rs 31,212.23 crore (Rs 28,416.87 crore).

As on 31 March 2003, the Government of India held 82.03% equity stake in IOC, while the public and institutions held 3.70% and 4.94% respectively.