Motilal Oswal's research report on IOCL
IOCL’s EBITDA/PAT came in 16%/20% below our estimates in 1QFY26, impacted by higher-than-anticipated refining inventory loss (USD4.8/bbl). However, blended marketing margin stood 24% above estimate at INR7.8/litre. Refining throughput and marketing volumes came in line with estimates. The Union Cabinet has approved INR300b in LPG compensation to OMCs, which will be paid in 12 tranches. While the disbursement timeline remains undisclosed, we estimate IOCL to receive ~INR72b in both FY26/FY27 (48% of total compensation). This will result in a ~4% increase in IOCL’s FY27E BVPS.
Outlook
The stock trades at 13x consolidated FY27E EPS of INR10.7 and 0.9x FY27E P/B. We downgrade the stock to Neutral with a TP of INR150, valuing at 1x FY27E
P/B.
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