Hold Indian Oil Corporation; target of Rs 94: Prabhudas Lilladher

Prabhudas Lilladher's research report on Indian Oil Corporation

Indian Oil Corporation (IOCL) Q2 EBITDA stood at Rs 213.1 bn (down 4% QoQ, PLe: Rs 171.8 bn) and PAT at Rs 129.7 bn (down 6% QoQ, PLe: Rs96.4 bn). The beat on estimates was driven by higher than expected refining margins. Refining capacity utilization stood at 100.9%. Going ahead, we anticipate GRMs at US$6/bbl for FY25/26E and gross marketing margin at Rs 4.2/ltr for FY25/26E.

Outlook

The stock is currently trading at a PBV of 0.8x and EV/EBITDA of 4x, factoring in the softening Singapore GRMs and inability to pass on rise in fuel cost. We maintain ‘Hold’ rating with a TP of Rs 94 (Previous TP Rs 97) based on 0.7x FY26E P/BV.