Many investors mistake Reliance Industries (BSE: 500325, NSE: RELIANCE) as India’s top selling refinery. But the country's top player continues to be Indian Oil Corporation (BSE: 530965, NSE: IOC) and by a margin that RIL can’t easily bridge. But when it comes to profits, it is another story altogether. Still, nobody is lost on IOC’s potential if free market prices for petroleum products are introduced. That is why market waits with bated breath on counters like Indian Oil, and their FPOs. And unlike cousin BPCL (BSE: 500547, NSE: BPCL), IOC is not a constituent of Nifty, and such low visibility can be a huge advantage in capital markets, going forward. Even if full free pricing remains unachievable, a restructuring of the price regime can positively affect Indian Oil. Quantitatively, it is difficult to write off India’s largest business enterprise, ranked 105th on Fortune 500. However, due to the uncertainties with the price-control regime and the government subsidies, IOC has a track-record of springing nasty surprises, as it happened in 2007-08 and 2008-09, when profits dipped drastically. Retail investors considering the FPO route should be cautious on this front, as international crude prices and government policies have a telling effect on this counter. But with a P/E less than 8 and a P/B less than 2, there is no doubt that IOC is now available at a bargain.
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