YES Securities' research report on Indian Oil Corp
IOCL’s 3QFY23 reported Ebitda at Rs 35.9bn (-62% YoY; +83% QoQ), missed our and street estimates, primarily on weaker than estimated reported GRM at USD 12.9/bbl. The adjusted (for inventory loss) core GRM as per our estimates stood at ~USD 17.4/bbl. Correction in crude oil and product prices during the quarter, resulted in plausible inventory losses, weighing on reported GRMs. Retail marketing margins on Petrol and Diesel, however improved QoQ to Rs 10/ltr (2Q: Rs (0.04)/liter) and Rs (5)- (6)/ltr, (2Q: Rs (12)/ltr), which in our assessment was offset partially by marketing inventory losses. IOCL 9M operating profit nevertheless remains in black, despite the challenging operating environment As we write, while Petrol margins have moderated to Rs 5.5/ltr, the loss on retailing of Diesel has also narrowed to Rs (3-4)/ltr.
Outlook
We expect retail marketing to normalize over FY24-25e and maintain BUY with a TP of Rs 120/sh.
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