Buy IOCL; target of Rs 115: Motilal Oswal

Motilal Oswal is bullish on IOCL recommended buy rating on the stock with a target price of Rs 115 in its research report dated November 01, 2023.

Broker Research

November 05, 2023 / 17:18 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on IOCL

IOCL reported EBITDA of INR213b (up 4.3x YoY), in line with our estimate of INR210b, led by better-than-expected GRM at USD17.9/bbl (vs. our est. of USD14.9/bbl) and higher marketing GM at INR5.8/lit. (vs. our estimate of INR5/lit). Refining throughput came in line with our estimate at 17.8mmt (up 10% YoY). In the marketing segment, domestic sales volumes were also in line with our estimate at 21.9mmt (up 2% YoY). Singapore GRM has declined to USD3.3/bbl in 3QFY24 to date from USD9.8/bbl in 2QFY24, which may lead to a decline in the refining performance in the coming quarter. A decline in Russia crude discounts may also weigh on IOCL’s performance in the ensuing quarter. OMCs are estimated to be generating marketing margin of INR8.2 on petrol and a marketing loss of INR3.8 on diesel in 3QFY24 to date. Margins may also be affected by retail fuel price cuts in the wake of upcoming elections and/or a rise in crude oil prices due to quota management by OPEC+

Outlook

The stock trades at 6.9x consolidated FY25E EPS of INR13.5 and 0.7x FY25E P/BV. We reiterate our BUY rating on the stock, valuing it at 0.9x FY25E P/BV to arrive at a TP of INR115.

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