Indian Oil Corporation Ltd. share price target

Lockdowns spurred by the second COVID wave in India have impacted demand for petroleum products. As stated by the company, petroleum product demand in India declined: 5%/11% for petrol/diesel in Apr'21 (v/s 2019) 33%/35% for petrol/diesel in May'21 (v/s 2019) Refinery utilization stood at ~96% in April and is at 84% in May'21; however, naphtha crackers are operating at 113% in May'21. Factoring in the same, we lower our FY22E EPS estimates by ~11%, primarily...

Reported GRMs during the quarter were at US$2.2/bbl, below our estimate of US$4/bbl. Core GRMs were at US$1.2/bbl while inventory gain was US$1/bbl. Benchmark Singapore GRMs, while recovering from Q2 levels of US$0.1/bbl, still remained low at US$1.2/bbl in Q3FY21. Improvement in petrol & diesel cracks will be important for stable GRMs. Taking into account some improvement in demand for petroleum products, we expect GRMs at...

Indian Oil Corporation (IOC) Q3 results, Higher inventory gain and petrochemical margin boosts profits, beats estimates Indian Oil net sales fell 18% to Rs 101969.47 crore for the quarter ended Dec20 compared to corresponding previous year period. This included nil subsidy from the government compared...

IOC's Q3FY21 result was a beat to our estimates owing to robust performance from marketing and petrochemicals business. The company also reported inventory gains of Rs26.3 bn (Rs9.2 bn for refinery and Rs17.1 bn for marketing). While core GRM came slightly below expectation at US$1/bbl (IDBIest US$1.5/bbl), marketing EBITDA/mt increased 33% and petrochem EBITDA/mt doubled YoY to US$335. Volume across segment rebounded to pre-covid levels where ATF is yet to catch up while Petrochem volume grew 25% YoY. Factoring higher marketing margin and up cycle in petrochem, we raise FY22E/FY23E EBITDA estimates by 11%/9%. We raise our TP to Rs113 from Rs87 earlier and...

IOC's Q2FY21 result was a beat to our estimates owing to significantly higher inventory gains. Adjusting to this, result was below our forecast on the back of negative core GRM and lower than expected marketing profits. Reported GRM came at US$8.6bbl owing to inventory gain of Rs73bn (US$9.6/bbl) while core GRM stood at negative US$1/bbl. IOC's crude throughput declined 20% YoY to 14mmt while sales volume dipped 6% YoY to 18.9mmt. While Petchem EBITDA grew a robust 56% YoY to Rs12.1 bn on better polymer cracks, pipeline EBITDA saw a decline of 19% due to 20% lower volume. Overall the company expects capex of Rs210 bn in FY21 and expects 100% utilization from Q3FY21...

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...

IOC's Q1FY21 result was lower than our expectations owing to higher inventory losses against expectation of gains and lower than expected volume. IOC's crude throughput declined 25.2% YoY to 12.9mmt (vs IDBIest of 13.8mmt) while sales volume dipped 27% YoY to 16.5mmt (IDBIest 17.4mmt). Robust profit at marketing division was offset by huge loss at refining and sharp decline in profit of the pipeline business. Reported GRM came at a negative US$1.98/bbl whereas normalized GRM was US$4.3/bbl (inventory loss of US$6.8/bbl). The company highlighted that Q2FY21 should witness an inventory gains as average cost of oil is US$32.6/bbl. We largely keep our estimates and target...