Indian Oil flared up to its 52-week high of Rs 335.90 on market rumours that the company may declare a huge dividend for FY 2002-03.

The scrip of India's largest oil refinery company, then, eased from the high, however. Yet it was still higher by 6.88% at Rs 333 on BSE by 12:56 IST. Close to 1.9 lakh Indian Oil (IOCL)  shares changed hands on BSE till then. The stock has now risen 42% from Rs 235 on 30 April 2003.

Buying on the counter is attributed to hope that the company will record an impressive performance for FY 2002-03 as well as on the basis of future prospects . Interest in the counter was also generated by rumours that the company will declare a huge dividend of around Rs 40 per share (400% on a face value of Rs 10 per share) for FY 2002-03.

Fundamentally, the company looks very strong. IOCL has 10 refineries and 22,000 petrol pumps, representing 42% of total refining capacity and 53% of petroleum product sales in India. IOC owns 6,523 km of crude and product pipelines in India including eight of the 11 product pipelines. Pipeline decontrol is underway and that should give IOC huge profits in future.

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

Meanwhile, for the third quarter ended 31 March 2003, the company 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 held 91.26% stake in IOCL.