Indian Oil Corp - Q3FY21 First Cut - ICICI Direct

(CMP - Rs. 93; MCap - Rs. 87881 crore)

Indian Oil Corp (IOC) reported Q3FY21 profits were better than our estimates on account of the marketing segment. On the operational front, the refining segment remains weak whereas the marketing segment was largely stable. In the refining segment, reported GRMs came in at US$ 2.2/bbl, uplifted by inventory gain of US$ 1/bbl. Marketing sales at 21.4 MMT were largely in line with estimates. EBITDA stood at Rs. 9621.9 crore, above our estimate of Rs. 9117.9 crore mainly due to inventory gains. Subsequently, reported PAT stood at Rs. 4916.6 crore vs. our estimate of Rs. 4523.1 crore.

Q3FY21 Earnings Summary

- IOC's topline increased 26.7% QoQ to Rs. 146598.8 crore (our estimate: Rs. 122288 crore). Marketing sales at 21.4 MMT were largely in line with estimates and up 21.1% QoQ as retail demand witnessed sharp pick up in unlock phases. Marketing segment reported inventory gains of Rs. 1711 crore during the quarter

- IOC achieved crude throughput of 17.9 MMT in Q3FY21, up 27.9% QoQ in line with estimates. Reported GRMs came in at US$ 2.2/bbl below our estimate of US$ 4/bbl. Reported GRMs were benefitted by inventory gain of US$ 1/bbl while core GRMs were weak at US$ 1.2/bbl as product cracks remained subdued

- EBITDA stood at Rs. 9621.9 crore (up 2.1% QoQ), supported by inventory gains and was above our estimate of Rs. 9117.9 crore. As a result of forex gains, the company reported lower than expected interest cost while other income was higher than anticipated at Rs. 1269.5 crore (our estimate: Rs. 743.2 crore). Subsequently, reported PAT stood at Rs. 4916.6 crore, down 21% QoQ (our estimate: Rs. 4523.1 crore).

- The company has declared an interim dividend of Rs. 7.5/share

Fuel demand has improved QoQ and reached near normal during Q3FY21. In the first fortnight of January, while Petrol demand grew YoY Diesel demand remained below pre-Covid level. Marketing segment continues to report steady performance in Q3FY21. Due to subdued product spreads, core GRMs are still weak and affecting the refining performance. Improvement in GRMs and sustained growth in fuel demand (mainly Diesel) will be important for IOC's performance in the near term.

We will be coming out with a detailed report soon.

Shares of INDIAN OIL CORPORATION LTD. was last trading in BSE at Rs.93.3 as compared to the previous close of Rs. 92.65. The total number of shares traded during the day was 4495845 in over 15851 trades.

The stock hit an intraday high of Rs. 96.35 and intraday low of 92.75. The net turnover during the day was Rs. 423802070.

Source : Equity Bulls

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