Indian Oil Q4 Results Review - Lower-Than-Expected Marketing Margin Lead To Miss: Motilal Oswal

Motilal Oswal Report

Indian Oil Corporation Ltd. reported an Ebitda of Rs 143.5 billion (up 14% YoY), below our estimate of Rs 184 billion, led by weaker-than-expected marketing gross margin at Rs 3.3/litre. (versus our estimate of Rs 4.5/litre). In the refining segment, throughput came in line with our estimate at 19.1 million metric tonne (up 5% YoY).

In the marketing segment, domestic sales volumes stood at 21.1 mmt (our estimate of 20.5 mmt versus 21.1 mmt in Q3 FY22). Marketing gross margin stood at Rs 3.3/litre in Q4 FY23. Oil marketing companies are estimated to be generating gross margins of Rs 9.1/Rs 11.6 on petrol/diesel in Q1 FY24- to-date.

Singapore GRM of $8.2/barrel of oil in Q4 FY23 has now dropped to ~$3.4/bbl in Q1 FY24-to-date, which could hit refining margins in the coming quarter.

Besides, IOCL has the highest leverage to refining segment and is expected to be impacted the most due to decline in GRMs.

Petchem volumes declined 13% YoY to 0.68 mmt (0.37 mmt in Q3 FY23); while petchem margin expanded 5% YoY to $117/ million tonne ($319/mt in Q3 FY23).

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