We maintain Buy on Indian Oil Corp (IOC) based on our unchanged target price (TP) of Rs146. Our buy call is based on the following: (i) improved outlook for retail margins under sub-US$4050/bbbl crude oil (ii) refining and petchem margins are at trough levels and could revive over the next 1-2 years due to likely closure of capacities and (iii) compelling valuation post the sharp 45% fall in the stock price in the last one year that has priced in worries over policy/volatility in margins and likely risk of increasing competition from private retailers/alternative fuels. This is supported by the management's view that the global refining business was not sustainable and should improve over time. IOC is also upbeat on fossil fuels and quoted BP's study, which expects India's oil demand to peak only by 2050. IOC's 2QFY21 adjusted standalone PAT at...

IOCL's Q2FY21 EBITDA of Rs 94bn (2.6x YoY) was above estimates.

Company debt further decreased on a QoQ basis to INR915b in 2QFY21 (from INR986b in 1QFY21 and INR1,165b in 4QFY20). India is seeing a significant increase in vehicular traffic movement, with gradual revival in domestic air travel as well. In Sep'20, petrol witnessed consumption growth of +3.3% (v/s -7.5% in Aug'20). Diesel still recorded decline of 6.0% YoY, although much lower than 20.7% in Aug'20. We continue to prefer IOCL, which, despite having annual capex of ~INR260b (the highest among the OMCs), is expected to report ~30% cumulative FCF yield over...

Depreciation rose 10% to Rs 2613.12 crore. PBT was down 42% to Rs 2983.38 crore. Tax expense decreased 54% to Rs 854.15 crore. PAT was down 35% to Rs 2129.23 crore. Considering share of profit or losses of associates and minority interest, net profit of the company reported 40% fall to Rs 2226.8 crore. Promoter shareholding remains unchanged at 51.5% at the end of June'20 quarter compared...

NBIE Values your patronage- Vote for The Team in the Asia Money poll 2020. Click Here We maintain Buy on Indian Oil Corp (IOC) based on our trimmed TP of Rs146. Our buy call is based on: (i) improved outlook for retail margins under sub US$4050/bbbl (ii) refining and petchem margins are at trough levels and could revive over the next 1-2 years based on likely closure of capacities and iii) compelling valuations post the sharp 34% fall in the stock price in the last one year that has priced in worries over policy/volatility in margins and likely risk of increasing competition from private retailers/alternative fuels. IOC's 1QFY21 adjusted PAT at...

Hike in retail prices support marketing margins Global oil prices fell to multi-year lows in April due to a sharp reduction in demand. With increase in demand following a resumption of economic activities, oil prices recovered. Brent crude oil prices on a closing basis increased by US$19.4/bbl QoQ to US$40.9/bbl. IOC reported marketing inventory gain of | 1392 crore. Core marketing margins were stable during the quarter as the company increased petrol & diesel prices post excise duty hike. IOC's marketing sales de-grew 29.2% YoY to 15.2 MMT (our estimate:...

Tata Motors: In 1QFY21, Tata Motors reported a loss of Rs 84bn due to the impact of the lockdown on the India business and at JLR. The silver lining was that CJLR (China JV) has broken even this quarter as retails in China recovered sharply. Tata Motors is continuing with its cost-cutting initiatives (Charge+ savings target is raised to GBP 2.5bn for FY21 from GBP 1.5bn earlier). The company is moving ahead with the subsidiarisation plans for the India passenger car business. Geopolitical uncertainties will partially offset the improving outlook, in our view. Reiterate ADD. Sun Pharma: Suns Q1 EBIDTA/PAT beat expectations on account of improved gross margin (product mix, productivity) and lower expenses (SG&A; and R&D;). India business grew by 3% YoY (chronic led). The US business declined 25% QoQ, impacted by muted trends in specialty (in line with expectations) and generics (Taro, price erosion). However, market share for specialty products were maintained at pre-Covid levels. The scale up in specialty is key to drive operating leverage and margins. While the costs pertaining to this business are largely expensed, the revenue traction is yet to be seen. Suns balance sheet continues to remain strong (repaid ~USD200mn debt in Q1). We increase our EPS estimates by 4%/7% to factor the beat and improvement in gross margin. We maintain Add rating with revised TP of Rs535. Indian Oil Corporation: We maintain ADD on IOC with a target price of INR 96, owing to an expected recovery in demand for petroleum products and, subsequently, refining margins in 2HFY21E....

Indian Oil net sales fell 6% to Rs 118007.32 crore for the quarter ended Mar20 compared to corresponding previous year period. This included subsidy from the government of Rs 133.37 crore down 77% on a y-o-y basis. Excluding compensation from the government net sales of the...

NBIE Values your patronage- Vote for The Team in the Asia Money poll 2020. Click Here We maintain Buy on Indian Oil Corp (IOC) based on our raised TP of Rs148. We are raising earnings 130% in FY21E, respectively after the 4QFY20 results con-call based on new assumption for FY21E (a) low risk of inventory loss in FY21/ possible gains in FY22, and b) improved petchem assumptions that offset the cut in refining and marketing volumes; and reduced retail margin Rs3.5/lit vs. Rs5.25/lit. Our buy call is based on: (i) improved outlook for retail margins under...

A sharp reduction in oil demand owing to Covid-19 outbreak resulted in a significant drop in crude oil prices. As a result, average Brent crude oil prices declined by US$12/bbl QoQ to US$50.6/bbl with closing Brent price at US$21.5/bbl. On account of the same, the company reported marketing inventory loss of | 2291 crore. However, core marketing margins were relatively steady during the quarter. IOC's marketing sales de-grew 4.5% YoY to 20.7 MMT (our estimate: 19 MMT) on account of lower diesel sales. Going forward, considering the extended lockdown in Q1FY21E, we expect...

IOC's Q4FY20 result was impacted negatively by higher inventory losses (Rs184.8 bn) and higher forex loss (Rs27.2 bn). Further, marketing and petchem EBITDA was a drag to profits owing to lower marketing margins, lower volume and lower polymer delta. Reported GRM came at a negative US$9.6/bbl whereas normalised GRM reported by IOC was US$2.2/bbl (inventory loss of US$17.9/bbl). Refinery utilisation has already reached to nearly 90% in first three weeks of June (40% in Apr and ~62% in May) and management expect it to normalise within a month. We expect GRM of US$3/bbl and US$4/bbl in FY21 and FY22 respectively while marketing margin to remain stable on a...

We raise our standalone FY21/22 EPS estimate to INR 4.4/10.3 vs. (0.4)/9.2 owing to the change in tax rate to 25.2%. We raise our Core GRM estimates by USD 1.4/0 per barrel to USD 3.4/3.9 for FY21/22. We maintain ADD on IOC with a TP of INR 94 owing to an expected recovery in demand for petroleum products and subsequently, refining margins.

25 June 2020 The company posted huge inventory loss of INR185b (refining at INR162b and marketing at INR23b) during the quarter. Adjusted EBITDA for inventory stood at INR214.1b (v/s INR74.0b in 4QFY19 and INR50.3b in 3QFY20). Reported EBITDA came in at INR29.3b and forex loss for the quarter was at INR27.2b. Higher interest cost was offset by higher other income. The company revalued its inventory at the end of the quarter and recorded an exceptional item of INR113b (of which INR80b was refining and INR33b was marketing); thus, PBT came in at loss of INR136.1b. IOCL stated that total inventory loss of INR185b also includes revaluation loss. IOCL has moved to a lower tax rate and re-measured its DTL. Reported PAT stood at loss of INR51.9b.

India's petroleum product consumption surged 47% MoM (21% YoY) to 14.6mmt in May'20 as fuels across segments exhibited resurgent growth in tandem with the Indian economy's emergence from the world's strictest lockdown.

IOCL announced that domestic petroleum product demand improved in May as staggered easing of the lockdown stemmed the decline in consumption to 30% YoY (from 46% YoY in April).

Crude prices witnessed a sharp decline in March due to spread of Covid-19 across the globe and Opec deal failure. A likely increase in oil output by both Saudi Arabia and Russia from Q1FY21E and lower demand are expected to lead to a sizeable oversupply in the oil market. Subsequent low oil prices are expected to significantly affect ONGC's profitability....

Upstream companies and RIL will also be hit from weakening global economy and lower oil and gas realization. Global crude oil prices have crashed to USD35/bbl on disagreement between OPEC and Russia on extent of production cuts in a weakening global economy. Higher production cuts over current levels of 2.1mbpd were expected to help balance oil markets. With no agreements, we expect oil prices to remain weak. The OMCs with high leverage to low crude oil prices are best placed especially HPCL and BPCL. Our sensitivity suggests OMC...

We are upgrading Indian Oil Corp (IOC) from Accumulate to Buy based on our reduced TP of Rs136, which offers 24.5% upside from CMP. We are cutting earnings 13.5%/24.4%/3.87% for FY20, FY21E and FY22E, respectively after the 3QFY20 results con-call based on (a)YTD decline in Consolidated PAT of 39.4% and b) the weak pricing outlook for refining and petrochemicals, which is likely to get moderated by (i) a possible hike in BHVI MS and HSD prices (+Rs 1/lit each from April ) and (b) the upside in petrochemical volumes based on the ramp up in PTA, and the new twin-train 0.68mn tpa polypropylene (PP)project at Paradip. Our buy call is based on: (i) the sharp 20.6%/23.7% fall in the stock price in the last 3 months/one year has priced in worries over...

Indian Oil Corporation Ltd.'s net profit missed analyst estimates even as profit rose more than four times and its operational performance met estimates, aided by higher sales volume and inventory gains Indian Oil net sales fell 12% to Rs 123929.51 crore for the quarter ended December 2019 compared to corresponding previous year period. This included subsidy from the government of Rs 218.39 crore down 83% on a y-o-y basis. Excluding compensation from the government net sales of the company fell 11% to Rs 123711.12 crore....