Q1 Results: Indian Oil’s Profit Falls But Beats Estimates
Indian Oil Corporation Ltd.'s first-quarter profit fell but beat analysts' estimates.
Net profit declined 41 percent quarter-on-quarter to Rs 3,596 crore in the April-June period, the state-run oil marketer said in an exchange filing. That compares with the Rs 2,370-crore consensus estimate of analysts tracked by Bloomberg.
Revenue rose 4.2 percent over last quarter to Rs 1,31,512 crore—also below the consensus estimate of Rs 1,40,268 crore.
The company's operational performance declined, but surpassed analysts' estimates. Operating profit—or earnings before interest, tax, depreciation and amortisation—dropped 23 percent over the previous quarter to Rs 8,350 crore. Operating margin contracted 230 basis points to 6.35 percent. Yet, it beat analysts' forecast of Rs 5,784-crore operating profit and 4.1 percent margin.
The better-than-expected operational performance came on the back of an improvement in gross refining margin, which stood at $4.69 per barrel in the first quarter.
- Crude throughput down 0.4 percent to 17.28 million metric tonnes.
- Sales volume down 0.5 percent to 21.55 million metric tonnes.
- Total debt down 16 percent to Rs 72,227 crore.
“Indian Oil's refining performance has come in better, but the marketing performance has been on the weaker side in the first quarter,” Probal Sen, senior vice president (research) at Centrum Broking, told BloombergQuint over the phone. The company's operating income, he said, would remain under pressure in the current financial year but there could be some improvement in FY21. “The possible stake sale by the government will continue to remain an overhang.”
Key Highlights
- Company to spend Rs 4,200 crore on BS-VI refinery upgradation in FY20.
- Subsidy due from the government stands at Rs 9,772 crore as of July 31, 2019, compared with Rs 19,121 crore in the previous quarter.
- Settlement of government dues led to lower debt.
- Capital expenditure for the financial year would be Rs 25,000 crore.
- Expects crude prices to remain range bound in the near future.
Shares of Indian Oil closed 1.36 percent lower a day after the earnings announcement, compared with the NSE Nifty 50 Index's 1.24 percent drop.
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