Will lower crude price, higher GRMs boost IOC's Q4 nos?

Moneycontrol Bureau

Indian Oil Corp (IOC) is expected to post over 7 percent year-on-year jump in March quarter profit to Rs 13600 crore on better refining margins and consistent diesel price hike since January. According to a CNBC-TV18 poll, revenues are expected to decline over 3 percent Y-o-Y to Rs 1.24 lakh crore as refinery throughput remained flattish at 14.2 million tonnes.

However, EBITDA (earnings before interest, tax, depreciation and amortization) is seen at Rs 17007 crore against Rs 14749 crore.

On Thursday, IOC’s peers Hindustan Petroleum and Bharat Petroleum posted 66 percent (Y-o-Y) and 190 percent (Q-o-Q) jump in Q4 bottomline on lower crude price and improved gross refining margins. IOC is also expected to perform good in the quarter gone by on similar factors.

Factors that will boost IOC’s Q4 numbers

Expect Q4 GRMs of USD 6.3/bbl vs USD6.1/bbl QoQ
Expect GRM recovery in line with BPCL
Recovery in both diesel and gasoline cracks.
Q4 gross under-recovery is expected to do down around 5 percent QoQ due to the impact of diesel reforms and lower LPG subsidies.

Post earnings announcement, management may give more clarity on future roadmap on these lines

*The firm has recently raised Rs 1,700 crore from the domestic bond market to meet working capital requirements.
*The oil retailer is planning to spend over Rs 10,000 crore on refining, marketing and petrochemical divisions.
*IOC plans to build a 5 million tonne a year liquefied natural gas (LNG) import facility at Katupalli (Ennore) by 2016.

The stock has climbed over 11 percent to Rs 293.05 in last six months against 5.10 percent rise in Sensex.

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