MOSL: IOC (Buy)-Core refining performance improves-op. environment to get better post elections
(IOCL IN, Mkt Cap USD18.4b, CMP INR135, TP INR183, 36% Upside, Buy)
- Core GRM stood at USD9.2/bbl in 3QFY19 (our estimate: USD4.3/bbl; 3QFY18: USD6.1/bbl; 2QFY19: USD3.5/bbl). CP GRM, excluding the impact of price lags, stood at USD5.15/bbl. Higher GRM, combined with higher throughput, resulted in core EBITDA of INR122.7b (our estimate: INR102.3b; +93% YoY, +164% QoQ). However, inventory losses stood at INR80.8b for refining and INR26.6b for marketing, as against our total estimate of INR69.7b. This resulted in significantly lower reported EBITDA of INR15.3b versus our estimate of INR32.7b. Forex gain stood at INR20.8b v/s INR6.3b in 3QFY18 and a loss of INR26.2b in 2QFY19. PAT came in at INR7.2b. Effective tax rate for the quarter appears high at 46%, but stands lower at 34.5% for 9MFY19.
- Higher GRM was on account of increase in distillate yield to 81.1% in 3QFY19 from 79.5% in 2QFY19 and an improvement in fuel and loss to 8.4% from 8.8% in 2QFY19. Refining throughput of 19mmt reflects 109% utilization.
- Marketing margin came in tad lower than our estimate. Inclusive of inventory loss, the implied marketing margin stood at INR3.5/lit (our estimate: INR3.9/lit; 3QFY18: INR4/lit; 2QFY19: INR5.7/lit). Domestic sales of refined products stood at 20.3mmt (+3% YoY, +9% QoQ).
- Petrochemical EBITDA declined 38% YoY/QoQ to INR9.7b – USD207/mt v/s USD353/mt in 2QFY19. Sales stood at 0.65mmt (+9% YoY, +2% QoQ).
Indian Oil is engaged in the sale of imported crude oil; and exploration of petrochemicals, and oil and gas. Co.'s products include liquefied petroleum gas, natural gas, petrol/gasoline, diesel/gas oil, aviation turbine fuel/jet fuel, lubricants and greases, marine fuels and lubricants, kerosene, bulk/industrial fuels, bitumen, petrochemicals, and crude oil. Co. also provides other products, which comprise benzene, carbon black feed stock, food grade hexane, jute batching oil, micro crystalline wax, mineral turpentine oil, paraffin wax, propylene, raw petroleum coke, sulphur, and toluene.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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