IOC Shares Fall Over 2% Even After Q1 Results Beat Street Estimates; Buy, Sell Or Hold? – News18

IOC Share Price: State-run oil refiner Indian Oil Corporation (IOC) shares fell over 2 per cent on Monday after the company reported its Q1 results. IOC share price fell as much as 2.38 per cent to Rs 93.01 apiece on the BSE.

IOC reported a 37 per cent rise in its net profit in the April-June quarter, which stood at Rs 13,750.44 crore in contrast to Rs 10,058.69 crore in the previous quarter.

Its consolidated net profit stood at Rs 14,735 crore in the first quarter of FY2023-24. The state-run company had reported a net loss of Rs 883 crore in the same period in FY23 on the back of high international crude oil prices.

IOC’s revenue from operations in the June quarter decreased by 12 per cent to Rs 2.25 lakh crore as against Rs 2.55 lakh crore in the year-ago period.

Its revenue from operations in Q1 FY24 declined 2.36 per cent to Rs 1.98 lakh crore from Rs 2.02 lakh crore in Q4 FY23.

Operational performance during the quarter improved as earnings before interest, taxes, depreciation and amortization (EBITDA) increased 44.5 per cent to Rs 22,163 crore from Rs 15,340 crore, QoQ.

The Average Gross Refining Margin (GRM) for the period April- June 2023 was $8.34 per bbl, as against $31.81 per bbl in the June 2022 period.

Should you Buy, Sell or Hold?

Nomura downgraded IOC to ‘Neutral’ as IOC Q1 results were below its estimates on a lower-than-expected refining margin. It has a target price of Rs 105 per share.

It expects oil prices to remain at elevated levels in the coming months. The brokerage notes that based on current prices, marketing margins have already declined to below-normative levels, which would impact contribution from the segment over H2FY24. Any retail price cut can further exacerbate the situation, Nomura said.

Nuvama Institutional Equities believes retail losses of FY23 on negative retail margins have been largely recouped. It remains cautious of any price cut by the government ahead of upcoming elections, which it believes to be a key risk to margins.

The brokerage expects more than $10 per bbl GRMs from CY24. It has a ‘Buy’ call on the stock and raised the target price to Rs 115 per share.

IOCL’s Q1FY24 EBITDA and net profit beat ICICI Securities’ estimates. It noted that global recession worries and lack of demand momentum in China in Q1FY24 have led to a sharp pull-back in GRMs, with Singapore GRMs declining by $4.1 per bbl QoQ for the quarter and IOCL in turn seeing a sharp decline YoY and QoQ in its reported GRMs.

“We continue to believe however that the market will likely tighten in H2FY24, hence we still factor-in GRMs of $10.5 for FY24E and $12/bbl for FY25E, ICICI Securities said.

The brokerage house maintained ‘Buy’ rating on the stock and raised the target price to Rs 120 per share from Rs 115 earlier.

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