Brokerages are raising their targets on the share price of Indian Oil post the quarterly numbers. Indian Oil Reported a standalone EBITDA Rs147 billion, for the quarter ending March 31, 2021. This was up 4x yoy/53% qoq with a 40% beat, driven by higher Gross Refining Margins and Petchem margins.
Net profits at Rs 87.8 billion (up 79% qoq) was a 40% beat, with lower ETR of 20% offsetting higher interest, lower other income and impairment.
"We cut FY22E/23E EPS by 10% each as we factor in lower marketing margins due to volatile oil prices. We raise target price by 18% to Rs 130, after lowering our net debt estimate based on reported FY21 numbers. Maintain Buy rating on IOCL with an EW stance in sector EAP," Emkay Global has said.
Another brokerage that has buy rating on the stock of Indian Oil is Motilal Oswal. In fact, the brokerage has set an even better price target of Rs 152 on the stock of IOCL.
"IOCL trades at 5.7x consolidated FY23E EPS of Rs 18.3 and 0.8x FY23E PBV. IOCL has traded at a huge discount in the recent past decade due to its capex cycle and CPSE-led liquidity. We value it at 1.1x FY23 PBV to arrive at Target Price of Rs 152," brokerage firm Motilal Oswal has said.
Lockdowns spurred by the second COVID wave in India have impacted demand for petroleum products - down 33% to 35% for petrol/diesel in May'21 (v/s 2019); Refinery utilization at 84% in May'21.
"Factoring in the same, we lower our FY22E EPS estimates by 11% weighed by the impact in 1QFY22. SG GRMs that have been trending above USD2.5/bbl thus far in 1QFY22 have fallen to sub USD2/bbl levels - amid the emergence of COVID cases globally over the past few days. In line with the company guidance, we believe the lifting of the COVID lockdowns across the globe would boost demand, driving an uptrend in GRM. We maintain Buy, with combined dividend yield of 15.3% over FY22-23E," the brokerage has said.