Inventory loss and weak petchem lead to earnings miss

Company
02 May 2024
5 Min read 
  • IOCL's 4QFY24 EBITDA of INR104b was 26% below estimate 
  •  Due to weaker-than-estimated reported GRM and weak petchem performance.
  •  Refining segment's performance expected to remain healthy given robust oil demand 
  •  Weak petchem performance may continue in the near term.
  •  OMCs estimated to generate marketing margins of INR2.0/INR0.5 per lit on petrol/diesel 
  •  Weak petchem performance led to cut in consolidated EBITDA/EPS estimates.
  •  IOCL had a cumulative negative net buffer of INR10.2b as of 31st Mar24 
  •  Total cumulative uncompensated loss stood at INR48b.
  •  IOCL is set to commission various projects over the next two years 
  •  Refinery projects expected to be completed by Dec25, Oct24, and Dec24.
  •  Stock trades at 12.4x consolidated FY26E EPS and 1.1x FY26E P/B 
  •  Reiterate BUY rating on the stock, valuing it at 1.3x FY26E P/B.
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