Motilal Oswal 's research report on IOCL
IOCL reported better-than-expected margins on all fronts – refining (core at USD4.4/bbl), marketing (INR8.6/liter) and petchem (EBITDA/mt at USD200), with in line refining throughput. Marketing sales were 6% lower than est. owing to impact of the COVID-19 led lockdown. Despite the sharp crude price increase (from its multi-decade trough) during 1QFY21, IOCL reported total inventory loss of INR32b owing to its longer inventory cycle. However, margins led to a huge beat on our EBIDTA estimates. Also, debt has decreased QoQ from INR1,165b to INR986b.
Outlook
The discount gap to its peers should shrink and we value it at 1.2x FY22E PBV (at par with FY15-18 post reform period), to arrive at target price of INR145. Reiterate Buy.
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