MOSL: IOC (Buy)-Paradip refinery-Growing bigger and stronger-Running at full utilization
​IOC: Paradip refinery: Growing bigger and stronger; Running at full utilization
(IOCL IN, Mkt Cap USD29.2b, CMP INR389, TP INR541, 39% Upside, Buy)
- We visited IOC’s INR345b, 15mmtpa Paradip refinery – one of the most complex refineries in India with a Nelson Complexity Index of 12.2. The refinery boasts of the highest petrol yield of 27% in the country, as well as the indigenously developed, patented and implemented Indmax technology for LPG maximization. From our visit, we infer that Paradip complex, with its upcoming projects, would be a key earnings driver for IOC, going forward. Key highlights of our visit:
Running at full utilization
- The mother unit was running at 100%+ utilization; secondary units too were running at optimum levels.
- The refinery has commenced taking heavy crude. According to management, there is significant leeway to increase utilization of the secondary units by buying intermediate feedstock. This would further support the GRM.
- The refinery is expected to produce 27% petrol, in addition to 42% diesel, 5% ATF and 8.6% petcoke. Fuel & loss is ~10%, but will come down with offtake of ~7mmscmd of RLNG, once the Dhamra LNG terminal is operational.
Evacuation channels well in place
- Over April-November 2017, coastal movement accounted for 39% of product dispatch, while pipeline and tank/trucks accounted for 26% and 12%, respectively. Rest was sold off to the other OMCs.
- Paradip-Raipur-Ranchi pipeline is fully functional. Paradip-Haldia LPG pipeline is ready up to Balasore, and should be completed in a few months.
- Rail loading facility for petcoke evacuation would be ready by March 2018.
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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