Indian Oil Corporation - Q4FY20 Result Update - ICICI Securities

Indian Oil Corporation (IOC) reported Q4FY20 results, which were above our estimates on an operational basis while profitability was lower. Revenues fell 3.6% QoQ to Rs. 139618.9 crore, above our estimate of Rs. 115355 crore. Both marketing and refining segment reported inventory losses. The quarter witnessed inventory loss of US$17.8/bbl, which led reported GRMs to -US$9.6/bbl while core GRMs were at US$8.2/bbl. EBITDA was at Rs. 212.2 crore (down 96.8% QoQ) against estimated loss of Rs. 514.5 crore. The company reported an exceptional loss of Rs. 11304.6 crore, owing to write down in valuation of inventories due to fall in oil prices. IOC adopted lower tax rate in the quarter and reported a net loss of Rs. 5185.3 crore vs. estimated loss of Rs. 2376.3 crore.

Valuation & Outlook

Marketing sales were down ~45% in April due to lockdown but recovered sharply in May, June. Petrol, diesel demand is currently at 85-89% of normal level. The management indicated a full recovery will take some more time. Post excise duty hike, IOC has hiked retail prices by ~Rs. 9-10/litre in June, which will lead to steady marketing margins, going forward. However, we are neutral on IOC at the current juncture given the volatility in refining margins. We maintain HOLD rating on the stock with a target price of Rs. 90 (based on average of P/BV multiple: Rs. 94/share, P/E multiple: Rs. 86/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IOC_Q4FY20.pdf

Shares of INDIAN OIL CORPORATION LTD. was last trading in BSE at Rs.89.1 as compared to the previous close of Rs. 85.05. The total number of shares traded during the day was 3040775 in over 13648 trades.

The stock hit an intraday high of Rs. 89.95 and intraday low of 85.5. The net turnover during the day was Rs. 269431901.

Source : Equity Bulls

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