A big news from New Delhi has created a stir in the stock market. The government oil company Indian Oil Corporation (IOC) has taken such a step, which is constantly catching up its stock. Actually, the company has entered into an agreement to supply Sustainable Aviation Fuel (SAF) in association with Air India. This is the reason that the trust of investors increased and the stock has shown a 28% jump from its lower level so far.
Air India and IOC’s green deal
IOC and Air India have signed an MoU. Its purpose is to make air travel environmentally friendly and promote the use of green energy. Through this agreement, both companies will increase the use of low-carbon fuel in the aviation sector. It is being considered a big step not only for India, but also in the direction of cleaning pollution in the whole world and clean energy.
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Why is this agreement important?
Aviation sector is considered a major source of carbon emissions worldwide. In such a situation, coming together of India’s largest oil company and the country’s major airline indicates that the country is serious about the clean energy mission. In the coming time, passengers can also see the use of certified green fuel in regular flights.
Brokerage house view
After this deal, Elara Capital has retained the advice of shopping on IOC stock. However, he has reduced his target price slightly to Rs 193. Brokerage believes that the earnings of oil marketing companies (OMCs) will remain strong in the coming years.
- Crude oil prices are estimated to be below $ 70 per barrel.
- The government is providing ₹ 30,000 crore to make up for LPG subsidy deficit.
- And, OMCs may get exemption to keep more benefits for clean energy projects.
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But the challenges are also no less…
Elara has also cut her forecasts a bit. According to him, the profit of IOC in FY 26, 27 and 28 may decrease 7%, 8% and 4% respectively. The reason for this is – weak rupee and decreasing margin from diesel sales. This effect has been clearly visible in the second quarter of the recently released FY26.
Flight ahead
Overall, this green fuel agreement of IOC and Air India can prove to be a game-changer for both Indian aviation and energy sector. If everything is estimated, then investors can get to see the speed of up to 193 rupees in the stock.
