Buy Indian Oil; target of Rs 90: Emkay Global Financial

Emkay Global Financial is bullish on Indian Oil has recommended buy rating on the stock with a target price of Rs 90 in its research report dated July 31, 2022.

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August 02, 2022 / 17:39 IST

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26 Aug, 2025 12:21

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Emkay Global Financial's research report on Indian Oil

IOCL reported Q1FY23 standalone EBITDA of Rs46.9bn vs. our estimate of Rs29bn. Net loss stood at Rs19.9bn vs. our estimate of Rs27.2bn loss. EBITDA beat was primarily led by an increase in reported GRM of USD31.8/bbl vs. our estimate of USD29.0/bbl. Core GRM came in at ~USD25.3/bbl (vs. USD22 est.). Refinery utilization was strong at 108% in Q1. Total marketing volumes were a 7% beat, with domestic sales up 23% yoy vs. 17% for industry. Petchem EBIT fell 53% qoq to Rs2.7bn, with volume down 17% qoq. Assuming Rs33bn of marketing inventory losses (incl. excise hit), our blended margin works out to negative Rs6.6/kg (vs. est. of negative Rs6.4/kg). Non-autofuel-LPG margins were a beat. Gross debt was up 26% yoy at Rs1,089bn on higher working capital needs.

Outlook

We cut FY23E EPS by 23%, building higher interest, forex loss, and exceptionals, largely maintaining EBITDA and FY24/25E EPS. We roll over to Sept’24E, retaining target multiple. We have cut our Sept’23E TP by 4% to Rs90. Retain Buy on reasonable valuations.

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