MOSL: IOC (Buy)-EBITDA/PAT significantly below est.-CP GRM at USD9.14/bbl
​IOC: EBITDA/PAT significantly below est.; CP GRM at USD9.14/bbl
(IOCL IN, Mkt Cap USD29.1b, CMP INR415, TP INR554, 34% Upside, Buy)
IOCL’s adj. EBITDA rose 11% YoY (-25% QoQ) to INR73.7b, significantly below our estimate of INR116b, primarily due to lower-than-expected reported GRM of USD7.98/bbl inclusive of inventory gains (est. of USD9.5/bbl and SG GRM of USD8.3/bbl) and lower refinery throughput of 16mmt (est. of 18mmt). Reported GRM of USD7.98/bbl includes a crude inventory gain of INR7.8b (~USD1/bbl). Marketing inventory gain stood at INR2.7b. IOCL recorded a forex loss of INR2.6b in the quarter, as against a gain of INR3.5b in 2QFY17 and INR6b in 1QFY18. Opex was higher due to (a) INR3b impact of GST implementation, (b) INR3.2b payment to Kandla Port Trust for earlier years’ lease rental revision and (c) higher repair & maintenance and demurrage. Adj. PAT rose 18% YoY (+38% QoQ) to INR37b, below our estimate of INR92b, further impacted by higher interest expense of INR7.7b (est. of INR5.9b; +26% YoY, +8% QoQ).
- CP GRM at USD9.14/bbl: CP GRM stood at USD9.14/bbl in 2QFY18 v/s 6.44/bbl in 1QFY18. However, the time difference in the calculation of RTP and inventory gain resulted in reported GRM of USD7.98/bbl, including an inventory gain of INR7.8b (~USD1/bbl).
- Refinery throughput was lower at 16.1mmt (est. of 18mmt; +3% YoY,-8% QoQ) due to refinery shutdowns at Panipat, Mathura, Gujarat and Barauni. Domestic sales of refined products stood at 18mmt (in-line; +4% YoY, -9% QoQ). All the refineries are operational now.
- Petrochemical segment impacted due to shutdown: EBITDA for the petrochemical segment declined 43% YoY/QoQ to INR10.3b due to lower sales at 0.45mmt (-26% YoY/QoQ) and lower spreads.
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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