November 07, 2016 / 15:49 IST
Prabhudas Lilladher's research report on IOC IOCL reported Q2FY17 results ahead of our estimates; EBITDA of Rs57.7bn (PLe: Rs52.6bn) (+767% YoY, ‐58% QoQ) and PAT of Rs 31.2 bn (PLe: Rs 25.3 bn) (‐62% QoQ). Better‐than‐expected earnings was led by 1) higher than‐ expected refining margins of US$4.3/bbl (PLe: US$3.5/bbl) 2) lower‐than expected other expenses (Q2 at Rs63.9 bn, ‐8% QoQ, PLe: Rs70 bn) and 3) higher other income of Rs8.5 bn (PLe: Rs6.6 bn).
We increase our earnings by 16%/1% for FY17/18E respectively, to factor in higher refining margins from inventory gains. Reiterate ‘BUY’ with a revised PT of Rs 385 (Rs 345 earlier) based on 11x FY18E (10x earlier) plus adding the investments at 25% discount to market.
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