IOC, Suzlon Energy shares in focus as boards consider fundraising today. Key details

Shares of India Oil Corporation Limited (IOC) and Suzlon Energy Ltd will be in focus today, as the boards of two companies consider fundraising plans later in the day. IOC’s proposed rights issue is seen strengthening its capex spending and the credibility of its emission-reduction plans. For Suzlon Energy, analysts sees immediate resistance levels at Rs 19-20 levels.

IOC rights issue

The Indian Oil Corporation Ltd (IOC) board would meet today to consider raising of capital through right issue of equity shares to meet the capital expenditure plan for its various projects. The issue, if considered, will be subject to various statutory approvals as may be required, the largest state-owned oil refiner in the country said post market hours.

Fitch Ratings on Wednesday said plans to raise capital by oil marketing companies, including IOC, should strengthen their capex spending and the credibility of their emission-reduction plans. An injection of capital from the Indian 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.

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To recall, IOC has already approved an increase in its authorised share capital of Rs 15,000 crore. "We believe the size of the planned aggregate equity infusion may be higher than the budgetary allocation due to minority investors’ participation in the rights issues, but will monitor developments for more clarity," it said.

IOC is expected to report operationally strong June quarter results due to sharp recovery in marketing margins, which Prabhudas Lilladher expects at Rs 9 per litre (blended margins) against Rs 3 in the March quarter. It sees profit for June quarter at Rs 10,347.20 crore against a loss of Rs 1,992.50 crore in the year-ago quarter. Sales are seen falling 12.7 per cent YoY to Rs 1,95,814 crore from Rs 2,24,252 crore in the same quarter last year. Margin is seen at 9.1 per cent against 0.6 per cent YoY, Prabhudas Lilladher said in its results preview note.

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Suzlon Energy Fundraising

In the case of Sulzon Energy, its board of directors would meet on Friday to consider and approve capital raising by way of one or more or combination of permissible methods. The company board will also seek approval of the shareholders, if required. Technical analysts largely believe the stock may see immediate supply zone in the Rs 19-20 range. They see support for the stock in the Rs 14-15 range. The technical parameters indicate the counter has entered the over-bought territory and one should not be carried away with the ongoing momentum, said Osho Krishan, senior analyst for technical and derivative research at Angel One.

"As far as levels are concerned, a series of support is placed around Rs 15-14 odd zone on an immediate basis, followed by sacrosanct support of Rs 12-12.50. On the flip side, a strong hurdle could be seen around the Rs 19-20 zone in the comparable period," he said.

Santosh Meena, Head of Research, at Swastika Investmart also suggested Rs 19-20 levels as supply zone. "In the event of a pullback, it's worth highlighting that the range of 12–10 is expected to act as a robust demand zone, providing substantial support to the stock price, he added.

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