Emkay Global Financial's research report on Indian Oil
IOCL’s Q3FY25 SA EBITDA was Rs91.5bn, at a 25% miss to our estimate due to lower-than expected GRM (at USD2.95 from inventory loss of USD3.7/bbl) and weak marketing performance amid LPG under-recoveries of Rs54.5bn. Core GRM was better at USD6.6/bbl vs USD5.5/bbl (Emkay). Petchem EBIT-loss expanded to Rs1.5bn vs loss of Rs916mn QoQ, on lower deltas. Gross debt fell 8% QoQ to Rs1.31trn. The management expects an LPG subsidy announcement shortly, to compensate OMCs for losses. IOCL’s refining projects are on track to increase capacity to 88mmtpa by FY27-28. We lower FY25-27E EPS by 6-11%, factoring in a lower GRM run-rate and LPG subsidy of Rs100bn in FY25E.
Outlook
We lower Dec-25E TP by ~14% to Rs160, slightly cutting the multiple from 6x EV/EBITDA to 5.7x Dec-26E (roll over) due to earnings volatility; retain BUY.
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