Q3FY21 Result Update - Indian Oil Corporation - ICICI Direct

Indian Oil Corporation (IOC) reported Q3FY21 profits better than our estimates due to marketing segment. Revenues rose 26.7% QoQ to Rs. 146598.8 crore (our estimate: Rs. 122288 crore) as retail demand saw a sharp pick-up in the unlock phase. The quarter saw inventory gains of US$1/bbl leading to reported GRMs at US$2.2/bbl (our estimate: US$4/bbl). EBITDA was at Rs. 9621.9 crore, above our estimate of Rs. 9117.9 crore mainly due to inventory gains. The company benefited from forex gain as interest cost was lower than expected while other income was higher. Subsequently, reported PAT was at Rs. 4916.6 crore, down 21% QoQ (our estimate: Rs. 4523.1 crore).

Valuation & Outlook

Marketing sales saw sharp pickup QoQ and increased 21.1% during the quarter. While petrol demand has improved YoY, diesel demand still remains lower. Growth in demand (mainly diesel) and steady marketing margins will be important for marketing segment, going ahead. Due to lower product cracks, core GRMs are still weak and affecting the refining performance. Under asset monetisation programme, IOC's pipeline assets will be monetised. This is a positive and will unlock value of the business. However, we are neutral on IOC at the current juncture given the volatility in refining margins. We rollover valuations to FY23E and maintain HOLD on the stock with a revised target price of Rs. 105 (earlier: Rs. 85). We value the stock based on average of P/BV multiple: Rs. 111/share, P/E multiple: Rs. 99/share.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IOC_Q3FY21.pdf

Shares of INDIAN OIL CORPORATION LTD. was last trading in BSE at Rs.101.9 as compared to the previous close of Rs. 98.8. The total number of shares traded during the day was 6238074 in over 15637 trades.

The stock hit an intraday high of Rs. 102.35 and intraday low of 99.85. The net turnover during the day was Rs. 627786548.

Source : Equity Bulls

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