Buy IOCL; target of Rs 98: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on IOCL

IOCL reported an EBITDA of INR52.9b (down 46% YoY), below our estimate of INR118b, led by weaker-than-expected GRM at USD12.9/ bbl (v/s our estimate of USD15.1/bbl and USD19.2/bbl in 2QFY23). In the refining segment, throughput came in at 18.2mmt (up 5% YoY), in line with our estimate (of 18mmt). Singapore GRM remained steady and has been at USD10.2/bbl in Jan’23YTD; it touched a record high of USD21.7/bbl in 1QFY23. It stood at USD6.2/bbl in 3Q and USD7.1/bbl in 2QFY23. In the marketing segment, domestic sales volumes stood at 21.6mmt (our estimate of 20.5mmt; v/s 19.9mmt/19.2mmt in 2QFY23/3QFY22, respectively). Marketing gross margin stood at INR0.7/lit in 3QFY23. However, OMCs are estimated to be generating gross margins of INR11.2/INR2.3 on petrol/diesel, respectively, in 4QFY23YTD.

Outlook

IOCL is likely to benefit the most among its peers from an uptick in refining margin, further supported by robust Petchem margins going forward. We value the stock at 0.9x Dec’24E P/BV to arrive at our target price of INR98. We reiterate our Buy rating on the stock.

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IOCL - 01 -01-2023 - moti