Reduce Indian Oil, target price Rs 124: HDFC Securities

HDFC Securities has a reduce call on Indian Oil Corporation with a target price of Rs 124. The current market price of Indian Oil Corporation is Rs 122.25 . Indian Oil, incorporated in 1959, is a Large Cap company with a market cap of Rs 173550.02 crore, operating in the Gas & Petroleum sector.

Indian Oil Corporation's key products/revenue segments include Petroleum Refinery Products, Other Operating Revenue, Scrap, Sale of services and Subsidy for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 195036.06 crore, up 11.01% from last quarter Total Income of Rs 175699.37 crore and down -3.05% from last year same quarter Total Income of Rs 201173.88 crore. The company has reported net profit after tax of Rs 1912.86 Crore in latest quarter.

The company's top management includes Mr.Shrikant Madhav Vaidya, Mr.Krishnan Sadagopan, Mr.Sudipta Kumar Ray, Mr.Prasenjit Biswas, Dr.Dattatreya Rao Sirpurker, Prof. (Dr)Ashutosh Pant, Mr.Dilip Gogoi Lalung, Dr.Sujata Sharma, Mr.Arvind Kumar, Ms.Rashmi Govil, Mr.Alok Sharma, Mr.Anuj Jain, Mr.N Senthil Kumar, Mr.Sujoy Choudhury, Mr.Satish Kumar Vaduguri, Prof. (Dr)Ram Naresh Singh. Company has K C Mehta & Co as its auditors. As on 31-12-2024, the company has a total of 1,412 Crore shares outstanding.


Investment Rationale
HDFC Securities' REDUCE rating on Indian Oil Corporation (IOCL), with a target price of Rs 124, is premised on margin pressure due to increasing petchem supplies /capacity, lower refining margins, and moderation in auto fuel marketing margins. IOCL?s Q3FY25 reported EBITDA at Rs 71 billion (-54% YoY, +89% QoQ) and APAT at INR 28.7bn (-64% YoY, +14.9x QoQ) came in below our estimates. Earnings were impacted by weak performance from petchem segment, lower refining margins, inventory loss and absorption of underrecovery on LPG. Reported GRMs came in below our estimate at $2.9/bbl (-78% YoY, +86% QoQ). IOCL?s gross debt stood at Rs 1,314 billion (+24% YoY, -8% QoQ).

Promoter/FII Holdings
Promoters held 51.5 per cent stake in the company as of 31-Dec-2024, while FIIs owned 7.43 per cent, DIIs 10.08 per cent.