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Prabhudas Lilladher Report
Indian Oil Corporation Ltd.'s Q4 Ebitda stood at Rs 104.4 billion (down 33% QoQ, our estimate: Rs 145 billion, consensus estimate: Rs 156 billion) and profit after tax at Rs 48.4 billion (down 40% QoQ, our estimate: Rs 66.9 billion, consensus estimate: Rs 73.5 billion).
The weak set of results was primarily on account of lower refining margins although gross marketing margins remained moderate. Refining capacity utilisation stood at 104.5%.
Indian Oil declared a final dividend of Rs 7/share. The stock is currently trading at 1.2 times FY26 price/book value and 12.3 times FY26 earnings per share.
Factoring in structural weakness in gross refining margins and inability to pass on rise in fuel cost we anticipate GRMs at $6/barrel of oil for FY25/26E and gross marketing margin at Rs 4.2/litre for FY25/26E.
We rerate the stock from ‘sell' to ‘Reduce' due to correction in stock price rating with a target price of Rs 151 based on one time FY26E P/BV.
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