Indian Oil Corporation Ltd.'s net profit jumped more than twofold in the December quarter on strong inventory gains.
The country's largest oil marketer's net profit rose to Rs 7,883 crore from Rs 3,696 crore in the three months ended September, it said in a stock exchange filing today. That compares with the Rs 4,752 crore that analysts polled by Bloomberg had projected.
The bottom line was boosted by inventory gains of Rs 6,301 crore, highest since the first quarter of the previous financial year. Gains were led by an 18 percent increase in the price of Brent crude.
Inventory gains and higher contribution from the petrochemicals business aided the operating performance. Earnings before interest, tax, depreciation and amortisation jumped 80 percent sequentially to Rs 13,269 crore aided by a 43 percent increase in the petchem revenue. The operating margin expanded 289 basis points to 11.99 percent during the period.
IOC earned about $12.32 for every barrel of crude processed into fuel in the third quarter as compared to $7.98 per barrel in the previous quarter, IOC Chairman Sanjiv Singh told reporters at the press conference to announce earnings. The refining giant took a Rs 700 crore hit in the September quarter on account of the Goods and Services Tax.
Other Highlights
- Refinery throughput rose 13 percent quarter-on-quarter due to contribution from the Paradip refinery
- Sales volumes climbed 9 percent to 22.81 million metric tonnes
- Higher inventory gains and strong refining margins offset weak marketing segment
- Gross marketing margins on petrol averaged around Rs 2.3 per litre versus Rs 3.1 litre per last quarter
- Gross marketing margins on diesel averaged around Rs 1.9 per litre versus Rs 3.1 per litre last quarter
- The company announced a bonus issue of one free share for every share held.
- The board also declared an interim dividend of Rs 19 per share.
Shares of Indian Oil rose as much as 4 percent to Rs 415.60 apiece after the announcement. The stock trades at 9.6 times trailing 12-month earnings per share and 10 times its estimates for the coming year.
The scrip is 17 percent below the Bloomberg consensus one-year target price. It fell nearly 3 percent during the previous quarter, compared to an almost 9 percent advance in the benchmark Sensex.
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