Indian Oil Q1 Review - Strong Performance Driven By Inventory, Adventitious Gains; Core Weak: Yes Securities

Yes Securities Report

Indian Oil Corporation Ltd. Q1 FY25 performance showcases a poor core performance, surprises on inventory and adventitious gains. The integrated core margins in USD/bbl were lower than our estimates at 1.6 versus 3. With Ebitda at Rs 86.3 billion and PAT of Rs 26.4 billion, the core gross refining margins has been quite weaker with higher gains, while the marketing performance marginally weaker than our expectations.

Reported Ebitda and PAT is higher than ours but lower than the consensus expectations. The reported GRM of $6.4/barrel of oil and Rs 4.4/litre of blended gross marketing margins, while the core integrated margins fell to $1.6/bbl.

We maintain Buy rating with a revised target price of Rs 215 (earlier 210) valuing it on a sum-of-parts basis (core business at eight times enterprise value/Ebitda and investments at Rs 32). Prefer in oil marketing companies, HPCL > BPCL > IOCL.

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