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New Stock in EV Ecosystem IOCL | Yadnya Investment Academy

New Stock in EV Ecosystem IOCL | Yadnya Investment Academy

Published on 22 May 2021 Views 163 Comments 0

 

New stock has entered the Electric Vehicle Ecosystem, i.e. Indian Oil Corporation Ltd. This stock was well known in the traditional-fuel market but now it has made an entry in the EV segment in making batteries. Through which ways IOCL made entry into the EV Space and how this will impact the EV segment as a whole, know it all, in this short article.

Introduction:

Indian Oil Corporation Ltd. has joined hands with Israel based start-up "Phinergy" through the means of a Joint Venture. Phinergy makes Aluminium-based Air Batteries for vehicles and we can expect a new plant to be set up in India anytime soon.

In India, a lot of focus is given to Lithium-ion Batteries and they can be seen as a tough competitor to Aluminium Air Batteries. These batteries have greater efficiencies. However, there are some Pros and Cons of the Aluminium Air Batteries over the Li-ion Batteries which are discussed below:

Pros over Li-ion Batteries:

  • Aluminium Air Batteries has shown significantly greater efficiency than Lithium-ion Batteries. The Aluminium Air Batteries can be expected to be 3 to 5 times more efficient in terms of mileage.
  • Another big advantage of Aluminium Air Batteries is that we can produce these batteries in India itself as Aluminium is abundantly produced in our country. On the other hand, Lithium-ion Batteries have to be imported due to no availability in the domestic markets.
  • The Aluminium Air Batteries can provide a better range, which means that they can travel long distance with a single charge. Whereas, in the case of Lithium-ion Batteries, we have to charge multiple times due to the short range.

Cons over Li-ion Batteries:

  • The disadvantage of the Aluminium Air Batteries is that you have to put water on them to cool them off after around every 100km.
  • Another issue with Aluminium Air Batteries is with the replacement of the battery after covering certain kilometres. The new battery will cost less than the Lithium-ion Battery but the recurring task of replacing the battery through the service centre can be cumbersome.

Current Valuation of IOCL:

  • IOCL is having a market capitalization of around Rs. 1 Lakh Cr.
  • Stock PE generally trades between 4.5-5.
  • Having a Dividend Yield of 9%-9.5%.
  • IOCL is having a Debt-to-Equity Ratio of 1 but Interest Coverage Ratio is also quite good ranging between 9.5-10.
  • IOCL is a big player network.

 

Conclusion:

The Aluminium Air Batteries can give tough competition to Li-ion batteries as they are more efficient and provide a long range. But the replacement task after a certain distance can turn out to be cumbersome as Li-ion batteries can be easily charged at home without replacement. They have challenges but turn out to be widely accepted if implemented properly. By this development, IOCL has made its entry into the EV space and it will be an interesting thing to watch how things will go for the company from this point. Do not invest based on this news. This stock can be on one’s radar for the long-term view but need to be watchful about developments in the business. Consult your financial advisor before investing.

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