IOC drops nearly 3% on Goldman Sachs sell report

State-owned Indian Oil Corporation (IOC) dropped nearly 3 percent in early trade on Monday after foreign research house Goldman Sachs recommended a sell rating on the stock with a target price of Rs 330.

"Irregular diesel price increases will primarily impact the downstream companies as their cash flows display high volatility with losses from fuel sales," Goldman Sachs reasoned.

IOC cut petrol prices by Rs 2 per litre effective from Friday midnight, but it kept diesel price unchanged.

"We are losing Rs 8.64 per litre on subsidised diesel sales. Revenue loss on subsidised fuel sale is seen at Rs 86,500 crore for financial year 2012-13," the company said.

According to IOC, OMCs are seen losing Rs 1.63 lakh crore on subsidised fuel sale in FY13.

At 10:08 hours IST, shares slipped 1.77 percent to Rs 311.35 on Bombay Stock Exchange.