Indian Oil Corporation Rating – Buy: Missing Final Quarterly Results Estimates

IOC’s Q4FY22 standalone Ebitda at 11 116 billion (+ 18% qoq, -14% yoy) is 27/3% less than our / Bloomberg consensus estimate. Overall marketing sales volume was 2% higher than our estimate, where mixed Ebitda margin of $ 5 / bbl (vs. 4 4.4 Q3) was below our estimate of $ 7 / bbl, probably lower inventory profit / marketing margin. However, the low disclosure of inventory changes for both refining and marketing (from Q4FY21) and segment Ebitda (closed from Q4FY22) makes segmental analysis difficult, due to the potentially high impact of inventory changes (Brent up গত 37 / bbl qoq in the last 42 days). Q4 Individual PAT `60 billion (+ 3% qoq, -31% yoy) was 12/38% lower than EBITDA, lower other income and higher interest expense (+ 64% qoq).

For FY22, IOC’s standalone Ebitda increased by Rs 432 bn 14% as higher refinement margins and inventory gains offset weaker marketing margins, while standalone adjusted PAT increased by 3% to Rs 242 billion, driven by 56% year on year growth. The cost of interest.

Refinement: Overall weak on less reported GRM; The core is higher

18.3mmt (+ 5% qoq) refining throughput was 2% higher than our estimate. The IOC Q4 GRM reported ানী 18.5 / bbl (vs. Q3: $ 12.0 / bbl) on the strength of transport fuel cracks and possibly higher inventory gains. It reported a constant price of $ 13.6 / bbl (vs. 3 8.9 / bbl in Q3) or the original GRM (effect of win change). This refers to an inventory gain of $ 5 / bbl, which in our view is significantly less-stated.

Marketing: Sales are high; But the potential for marketing losses

Total marketing volume at 23.3mmt (+ 3% yoy) is 2% higher than our estimate, while sales of petroleum products (including exports) are 4% annual at 21.7mmt and 2% higher than our estimate. With the main state election in March ’22, Brent prices rising and product cracks, OMCs kept retail fuel prices unchanged for almost the entire Q4, causing significant losses in retail petrol / diesel sales. According to our estimates, the gross marketing margin probably dropped from $ 7.1 / bbl in Q3 to 4 4.4 / bbl in Q4FY22. Adjusting for inventory gains, the original marketing margin was probably weaker at 4 1.6 / bbl in Q4.

Auto fuel prices have risen 10 / l since the end of March to offset marketing losses on Q1FY23FOMCs, but prices have remained unchanged for more than a month despite sharp rise in international prices, increasing OMC’s losses in retail fuel sales. 11/12 per week. We expect OMC’s marketing losses to increase further in the first Q1FY23F.

With the strength of the transport fuel crack, the SG complex margin has increased by an average of $ $ 20 / bbl so far in 1 Q1 (vs. 8 7.8 / bbl Q4) and may provide some offset for OMC’s marketing losses.

Evaluation: We value the average FY23-24F EV / Ebitda different categories. We hold bye with an unchanged TP of 160 rupees. The stock traded at 0.87x FY23F P / B and 6.2x FY23F EV / Ebitda.

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