IOC Q4 preview: Brokerages expect profit uptick, but volume may falter

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State-owned IOC is scheduled to come out with its March quarter earnings on May 17.

Brokerage Prabhudas Lilladher expects Indian Oil Corporation (IOC) to report net profit at Rs 5,265.3 crore for January-March, up 0.9 percent YoY  and 634.6 percent QoQ. Net sales are seen to increase 8.5 percent annually, but fall 9 percent sequentially to Rs 1,27,395 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall 6.9 percent YoY (up 184.2 percent QoQ) to Rs 10,258.7 crore.

Kotak Institutional Equities expects IOC net profit at Rs 7,621.9 crore, up 46 percent YoY and 963 percent QoQ. Net sales are projected to jump by 20 percent YoY (up 1 percent QoQ) to Rs 1,41,093.2 crore while EBITDA is likely to rise 25 percent annually and 270 percent sequentially to Rs 13,363.4 crore.

Kotak expects IOC to report strong EBITDA driven by elevated marketing margins on auto fuels and adventitious gains of Rs 3,200 crore, which will be partly offset by lower underlying refining margins. The research firm also expects 8 percent QoQ decline in crude throughput to 17.5 mn tonne amid shutdowns, 5 percent YoY gain in sales volumes to 21.8 million tonne and lower normalised refining margins at $2.2/barrel (bbl).

Narnolia Financial Advisors pegs IOC net profit at Rs 4,123 crore. The research firm believes that throughput volume of the oil retailer is expected to decline 4 percent on a YoY basis to 21.6 MT in Q4, led by the lower fuel demand. Post expansion, volume of the petrochemical segment is likely to improve from Q1 FY20.

Expansion of the Paradip refinery and Haldia Coker facility, which was completed in Q3, is likely to have a positive impact on the GRM from Q4, it added.

Key things to watch out for:

GRM of Paradip refinery
Commissioning of Ennore terminal