Accumulate IOC; target of Rs 455: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking's report on Indian Oil Corporation Indian Oil Corporation (IOCL)’s 2QFY2016 revenue came in 2.4% ahead of our estimate at `85,385cr, led by a 5.8% yoy increase in product sales volumes to 19.07MMT as against 18.03MMT in 2QFY2015. Refining throughput increased 2.1% to 13.68MMT as against 13.41MMT in 2QFY2015, while total throughput increased 5% yoy to 19.98MMT as against 19.04MMT in 2QFY2015. Revenue however declined 24% yoy on account of lower price realisations. The EBITDA at `695cr was much lower than our expectation of `3,714cr, owing to lower than expected refining margins and high inventory losses. Refining margin at $0.9/bbl was much lower than our expectation and compared to $10.8/bbl as in 1QFY2016. This was largely on account of reduced spreads and adventitious loss of `1,197cr. We expect the impact from inventory losses to reduce going forward and profit to stabilise as crude prices stabilise at current levelsOutlook and valuationIOC is currently trading at an EV/EBITDA multiple of 5.4x its FY2017E EBITDA and 8.4x FY2017E EPS of `48.7. Lower oil prices resulting in significant reduction in under recoveries, expected improvements in refining margins and IOCL’s reach make it a structural play on the refining sector. We apply a 6x multiple on its FY2017E EBITDA to arrive at our price target of `455 and retain our Accumulate rating on the stock, says Angel Broking research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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