Motilal Oswal's research report on IOCL
IOCL’s 4QFY25 EBITDA was a 110% beat on est., driven by higher-thanestimated GRM (USD8/bbl) as well as marketing margins (INR5.9/lit). With tax rate coming in below est., resultant PAT stood 5x above est. at INR72.6b. While we believe the rally in OMC stocks is now entering the last phase, we still see a few positive catalysts: 1) 1QFY26 earnings will likely benefit from lower LPG under-recoveries due to an INR50/cyl domestic LPG price hike recently. The decline in propane prices as winter demand wanes provides an additional upside; 2) Russian crude proportion for OMCs is expected to rise again in 1QFY26, supporting GRMs; and 3) the marketing business earnings momentum has remained robust.
Outlook
The stock trades at 13.1x consolidated FY27E EPS of INR10.9 and 1x FY27E P/B. We reiterate our BUY rating on the stock with a TP of INR165, valuing at 1.1x FY27E P/B.
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