Indian Oil Corporation Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Indian Oil Corporation's (IOC) Q2FY17 results were above our estimates on the profitability front. The topline declined 6.5% QoQ to | 100273.94 crore, below our estimate of | 110047.6 crore, primarily due to lower-than-expected market sales Reported EBITDA was at | 5772.2 crore, above our estimated EBITDA...

IOC's Q2FY17 result came below expectation on the back of lower than expected sales volume and lower refining profit. Revenue declined 5.9% YoY to Rs 804 bn, EBITDA increased 731% to Rs57.7 bn and net profit came at Rs31.2 bn against a loss of Rs7.6 bn. Crude throughput increased 14.3% YoY to 15.6mmt while product sales volume increased 3.3% YoY to 19.7mmt. The company reported GRM of US$4.3/bbl against US$0.9/bbl in last year same quarter. The company reported strong EBITDA growth across segment primarily refining, marketing and petchem division. Paradip refinery would continue to ramp up in H2FY17 which would drive earnings growth in FY18. However, aggressive capital investment in new refinery capacity raises...

IOCs 2QFY17 EBITDA was Rs 57.7bn. Interest cost remains low (-19% YoY) owing to lower oil under recovery. PAT was Rs 31.2bn. Results are not comparable with previous period owing to inventory and forex impacts. The sequential decline in profits were led by absence of inventory gains in 2Q.

IOC reported strong results in 1QFY17 led by the inventory gains of ~Rs 70bn. EBITDA was Rs 136.8bn and RPAT was Rs 82.7bn. Results are not comparable owing to inventory and forex impacts. FY16 has been outstanding for OMCs led by (1) Strong GRM, (2) Higher profits in the marketing owing to higher volumes at lower product prices and healthy marketing margins, and (3) Reduced interest burden owing to lower subsidy receivables.Growth in FY17 may be challenging for OMCs considering the higher base and muted GRM trend in 2Q. The benefits of lower crude prices (balance sheet healing and lower interest cost) are mostly priced in. Expansion in marketing margins is the only trigger left for OMCs. However, IOC has an additional trigger of Paradeep refinery (15-mtpa capacity, Nelson index 13, likely to reach 95%+ utilisation by Dec-16).

They are structurally positive on IOC owing to its diversified business model, ramp-up of Paradeep refinery and possible upside in marketing segment. However, the stock has moved up by ~43% over the past 3-months and we see a correction in the near term (better entry point) led by the weakness in GRM and low chances of inventory gains. SOTP target is Rs 650 (3.5x FY18E EV/e for standalone refining, 6x EV/e for marketing, 7x EV/e for pipeline and Rs 137/sh from investments). Maintain BUY.

Indian Oil Corporation’s (IOC) Q1FY16 results were above our estimates on the profitability front. The topline increased 33.3% QoQ to | 107200.7 crore, above our estimate of | 88652.1 crore. However, revenues were marginally below our estimates, adjusting for change in accounting method due to Ind-AS. EBITDA at | 13683.5 crore was above our estimate of | 7015 crore due to higher-than-expected GRMs of US$10/bbl (our estimate: $6.7/bbl) supported by higher-than-expected inventory gain . PAT increased 5.7x QoQ to | 8269 crore, above our estimate of | 3621.8 crore. There was nil subsidy burden in the current quarter.

Valuation: ICICI Securities Limited have a BUY recommendation on the stock with a target price of | 670 (based on average of P/BV multiple: | 593/share and P/E multiple: | 747/share).

In order to ramp up the refining capacity, Indian Oil Corporation Ltd. (IOCL) has recently started part of its 15 million tonnes per annum (mtpa) paradip refinery. It is expected that it will be fully in FY17 and operational benefits will be seen in FY18. Currently IOCL has six refineries with a total capacity of 54.20 million tonnes. It also has subsidiary refineries with 11.50 million tonnes capacity. Paradip has taken its refining capacity to 80.7 million tonnes. Paradip refinery will enable IOCL to process low-cost and...

FY16 has been outstanding for OMCs led by (1) Strong gross refining margins, (2) Higher profits in the marketing segment owing to higher volumes at lower product prices and healthy marketing margins, and (3) Reduced interest burden owing to low oil under-recovery and lower subsidy receivables. As a result, IOC reported an EBITDA of Rs 201bn ( 98% YoY) and APAT of Rs 94bn ( 170% YoY).

ICICI Securities Ltd | Retail Equity Research Indian Oil Corporation's (IOC) Q4FY16 results were below our estimates on the profitability front. The topline declined 3.6% QoQ to...

Indian Oil Corporation's (IOC) Q3FY16 results were above our estimates on the profitability front. Revenues declined 22.1% YoY to | 83461.9 crore on account of lower crude oil prices YoY...

IOC reported an EBITDA of Rs 52.4bn, led by strong GRM of US$ 6.0/bbl. Results are not comparable owing to inventory, forex and under-recovery impacts. Lower crude prices have reduced UR and therefore, the interest cost was down -34% YoY. APAT was Rs 27.3bn.