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ICICI Securities Report
Indian Oil Corporation Ltd. has reported a recurring standalone Ebitda of Rs 153 billion and net earnings of Rs 100.6 billion for Q4 FY23. Earnings were well ahead of our estimates of Rs 80.5 billion Ebitda and profit after tax of Rs 35.6 billion.
IOCL reported gross refining margin of $$15.3/barrel of oil beat our estimate of $11.4/bbl, up $2.4/bbl QoQ but down $3.4/bbl YoY (Q4 FY22 saw record gross refining margins of $18.7/bbl), while throughput of 19.2 million tonne (up 5% YoY/QoQ) was also marginally ahead of estimates.
Blended retail margin of Rs 2.4/litre improved by Rs 4/litre QoQ, with blended marketing margin of ~Rs 3,467/tonne up 8.0 times YoY and 7.5 times QoQ.
Other opex of Rs 100.2 billion declined sharply by 17% YoY (our estimate: Rs 130 billion) and was an additional factor driving the outperformance.
With a further expansion in retail margins to Rs 6.5/litre, which should more than offset the relatively muted SG GRMs (down $5/bbl QoQ as of the second week of May 20223), we expect gross margins to improve by 21% YoY in FY24E.
Attractive valuations, bonus issue (1:2 declared with Q4 FY22 result) and robust dividend yield (expected at ~7% for FY24E) are all positives.
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