Buy IOC; target of Rs 183: Motilal Oswal

Motilal Oswal is bullish on IOC has recommended buy rating on the stock with a target price of Rs 183 in its research report dated January 30, 2019.

Broker Research

January 31, 2019 / 17:39 IST

26 Aug, 2025 12:21

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Motilal Oswal's research report on IOC

Core GRM stood at USD9.2/bbl in 3QFY19 (our estimate: USD4.3/bbl; 3QFY18: USD6.1/bbl; 2QFY19: USD3.5/bbl). CP GRM, excluding the impact of price lags, stood at USD5.15/bbl. Higher GRM, combined with higher throughput, resulted in core EBITDA of INR122.7b (our estimate: INR102.3b; +93% YoY, +164% QoQ). However, inventory losses stood at INR80.8b for refining and INR26.6b for marketing, as against our total estimate of INR69.7b. This resulted in significantly lower reported EBITDA of INR15.3b versus our estimate of INR32.7b. Forex gain stood at INR20.8b v/s INR6.3b in 3QFY18 and a loss of INR26.2b in 2QFY19. PAT came in at INR7.2b. Effective tax rate for the quarter appears high at 46%, but stands lower at 34.5% for 9MFY19.

Outlook

We expect RoE of ~13% in FY20/21. Dividend yield stands at ~6%. We value the stock at 1.3x (unchanged) Dec’20E PBV. With a TP of INR183, we maintain our Buy rating.

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