Sharekhan has given Buy recommendation for Indian Oil Corporation with a target price of Rs. 125 in its research report issued on Jul 30, 2021
Sharekhan’s research report on Indian Oil Corporation
Q1FY2022 PAT at Rs. 5,941 crore (down 32% q-o-q) was higher than our and street estimates, led by robust margins – reported GRM of $6.6/bbl (vs. our estimate of $5.3/bbl), higher marketing EBITDA margin of Rs2,883/mt (up 74% q-o-q) and sustained strong petchem EBITDA margin at $412/mt (up 1.3% q-o-q). Lower-than-anticipated impact of lockdown with marketing sales volume of 18.8mmt (down 9.6% q-o-q) and strong refinery utilisation of 96%. Petrol/diesel volume fell 14.9%/12.8% q-o-q but was above estimate; core GRM of $2.2/bbl was in-line. Strong earnings performance to sustain led by volume recovery (petrol/diesel at >100%/~85-90% of pre-COVID level), likely structural improvement in auto fuel margin, cyclical recovery in GRM, sustained high petchem margin, and inventory gain. Maintenance shutdown at Paradip refinery to have a slight impact on Q2 refinery throughput.