IOC slips 4% post Q2 numbers; brokerages maintain buy

ioc-lng

Share price of Indian Oil Corporation (IOC) fell more than 4 percent intraday on November 1 after the company reported its September quarter numbers.

The company reported standalone net profit at Rs 563.4 crore for the July-September period, an 84.3 percent quarter-on-quarter drop due to higher inventory losses.

The oil-marketing company’s profit stood at Rs 3,596 crore in the quarter ended June 2019. The fall was despite lower tax cost, which was Rs 251 crore for the quarter against Rs 1,783.3 crore in the June quarter.

The calculated gross refining margin (GRM) stood at $1.25 a barrel for the September quarter. The company had reported GRM at $4.69 a barrel in the April-June period.

The revenue during the quarter fell 15.1 percent sequentially to Rs 1.11 lakh crore.

At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) plunged 57.2 percent quarter-on-quarter to Rs 3,572 crore and margin contracted 320bps QoQ to 3.2 percent in Q2FY20.

Nomura | Rating: Buy | Target: Rs 170 per share

After recovering in Q2, refining margin has been weak so far in Q3, while may see some recovery in refining margin as IMO 2020 deadline approaches, said Nomura.

The near-term focus will be on governments planned stake sale in oil-marketing companies (OMCs). The market concerns will remain on further stake sale by government in the company, it added.

Jefferies | Rating: Buy | Target: Cut to Rs 200 from Rs 215 per share

Research house Jefferies has lower the EBITDA estimate by 6-8% for FY19-21.

The inventory of Rs 1,178 crore is higher than the estimates, while lower other income & higher than estimated interest costs are headwinds too, it added.

At 0948 hours, Indian Oil Corporation was quoting at Rs 140.40, down Rs 6.40, or 4.36 percent on the BSE.

News Source:- Moneycontrol

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