Broker's call: Indian Oil (Buy)

| Updated on February 05, 2021

IDBI Capital

Indian Oil (Buy)

Target: ₹113

CMP: ₹103.65

Indian Oil Corporation’s Q3-FY21 result was a beat to our estimates owing to robust performance from marketing and petrochemicals business. The company also reported inventory gains of ₹2,630 crore (₹920 crore for refinery and ₹1,710 crore for marketing).

While core GRM came slightly below expectation at $1/bbl (IDBI estimated $1.5/bbl), marketing EBITDA/mt increased 33 per cent and petrochem EBITDA/mt doubled y-o-y to $335. Volume across segment rebounded to pre-covid levels where ATF is yet to catch up while Petrochem volume grew 25 per cent y-o-y.

As announced in the Budget 2021-22, IOC plans to monetize its few pipeline (total: 14864km) through InvIT but refrain to lose control on it.

Factoring higher marketing margin and up cycle in petrochem, we raise FY22/FY23 EBITDA estimates by 11 per cent/9 per cent. Further, lower interest cost owing to declining debt level would further support PAT.

We raise our target price to ₹113 from ₹87 earlier and upgrade the stock to Buy from Accumulate.

Published on February 05, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like