Hold Indian Oil Corporation; target of Rs 90: ICICI Direct

ICICI Direct's research report on Indian Oil Corporation

Indian Oil Corporation (IOC) reported Q1FY21 results below our estimates on profitability front. Revenues fell 36.3% QoQ to Rs 88936.5 crore, (our estimate: Rs 81101 crore) due to nationwide lockdown. The quarter saw inventory loss of US$6.3/bbl leading to reported GRMs at -US$2/bbl (our estimate: US$ 5.4/bbl) while core GRMs were at US$4.3/bbl. Weaker than expected refining performance led to EBITDA at Rs 5512.3 crore (up 25x QoQ) vs. our estimate of Rs 8691 crore. Subsequently, PAT was at Rs 1910.8 crore (our estimate: Rs 4149.9 crore) against net loss of Rs 5185.3 crore in Q4FY20.

Outlook

However, we are neutral on IOC at the current juncture given the volatility in refining margins. We maintain HOLD rating on the stock with a target price of Rs 90 (based on average of P/BV multiple: Rs 93/share, P/E multiple: Rs 86/share).

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