Accumulate Indian Oil Corporation; target of Rs 152: Prabhudas Lilladher

Prabhudas Lilladher's research report on Indian Oil Corporation

Indian Oil Corporation (IOCL) reported refining throughput of 18.7mmt with reported GRM of USD2.15/bbl, led primarily by inventory losses. Domestic marketing sales volume stood at 22.4mmt with implied gross marketing margin (GMM) of Rs8.3/lit. Reported standalone EBITDA came in at Rs126.1bn (Ple Rs172bn, BBGe Rs156bn, +46% YoY, -7% QoQ), YoY rise primarily led by rise in GMM. Standalone PAT came in at Rs56.9bn (Ple Rs92.9bn, BBGe Rs86.3bn). Petrochem EBIT stood at a loss of Rs10.2mn. While GRMs remain subdued at ~USD3/bbl, benign crude oil prices are expected to keep GMMs strong. We build in a GRM of USD4.7/5/6/bbl forFY25/26/27E. On the marketing front, we build in a GMM of Rs6.5/4.8/4.8/lit for FY25/26/27E.

Outlook

Due to correction in stock price combined with strength in GMMs and compensation of LPG underrecoveries, we upgrade the stock from ‘Reduce’ to ‘Accumulate’ rating on the stock with a TP of Rs152 (earlier TP Rs138) based on 1.0x FY27E P/BV.