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Nirmal Bang Report
Indian Oil Corporation Ltd.'s Q2 FY24 standalone revenue at Rs 1,797.4 billion beat our estimate/street estimate by 10%/14.5%. Profit after tax at Rs 129.67 billion beat our estimate/street estimate by 263%/15%.
Indian Oil's gross refining margin at ~$$18.11/barrel of oil was 86.9% above our estimate refining throughput at 17.8 million tonnes was 3.8% below our estimate.; sales volume missed our estimate. by 2.7% - motor spirit/high speed diesel sales were up 1.8%/7.6% YoY.
We have cut FY24E/FY25E by 7.5%/23.7% on reduced marketing/petchem Ebitda - implies tempered outlook beyond peak earnings in FY24E, which will offset any increase in GRM estimate.
Maintain 'Accumulate' on muted risk-reward. We have cut our SOTP based target price by 3.3% to Rs 93 on an unchanged enterprise value/Ebitda multiple after rolling over to September-25E.
The stock is likely to be capped due to potential dilution from proposed Rs 220 billion rights issue, limited catalysts and the ~31.4% rally YoY.
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