MOSL: IOCL (Buy)-Better-than-expected margins drive beat
IOCL: Better-than-expected margins drive beat
(IOCL IN, Mkt Cap USD13.1b, CMP INR103, TP INR157, 52% Upside, Buy)
- IOCL reported a beat on our estimates, led by higher-than-estimated reported GRM (USD6.6/bbl), marketing margins (INR6.2/lit), and marketing sales volumes (-6% QoQ – despite the second COVID wave led lockdowns). Thus, EBITDA stood at INR111b (+65% est., +102% YoY, -18% QoQ), with PAT at INR59b (+211% YoY, -32% QoQ).
- SG GRM is averaging higher MoM at USD2.9/bbl in July (v/s USD2/bbl in 1QFY22), the highest ever since the COVID outbreak in Feb'20. Recovery is entirely driven by higher demand for gasoline (margins at USD10.1; +USD3 MoM); while ATF and gasoil margins remain the same MoM at USD4.3/4.7.
- With the total phasing out of the COVID lockdowns and closure of refinery complexes (est ~3mnbopd over the next 2–3 years), the refining margin would return to its long-term average (of USD5–6/bbl).
- debt declined further to INR857b in 1QFY22 (down 16% v/s end-FY21). We maintain Buy, with combined FCF yield and dividend of ~21-25% over FY22–24E. It trades at 6.1x consol. FY23E EPS and 0.7x FY23E PBV.
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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