IOC share price falls over 2% after Q1 results; Should you buy, sell or hold? Here is what brokerages have to say
- IOC reported a standalone net profit of ₹13,750.44 crore in the quarter ended June 2023, rising 36.7% from ₹10,058.69 crore in the previous quarter.
Shares of Indian Oil Corporation (IOC), the state-run oil refiner, fell over 2% on Monday after the company reported its Q1 results. IOC share price fell as much as 2.38% to ₹93.01 apiece on the BSE.
IOC reported a standalone net profit of ₹13,750.44 crore in the quarter ended June 2023, rising 36.7% from ₹10,058.69 crore in the previous quarter. The company had posted a net loss of ₹1,992 crore in the same quarter last year.
IOC’s Q1FY24 revenue from operations fell 2.36% to ₹2.21 lakh crore from ₹2.26 lakh crore, QoQ.
Average Gross Refining Margin (GRM) for the period April- June 2023 was $8.34 per bbl.
Read here: Indian Oil Corporation Q1 Results: Net profit rises 37% to Rs13,750 crore; revenue falls 2.3% QoQ
IOC Q1 results attracted mixed brokerage reactions. Check out what various brokerages have to say on IOC Q1 results:
Nomura
Nomura downgraded IOC to ‘Neutral’ as IOC Q1 results were below its estimates on lower-than-expected refining margin. It has a target price of ₹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.
Motilal Oswal Financial Services
IOC’s Q1 EBITDA was below Motilal Oswal’s estimate due to weaker-than-expected GRM at and lower marketing GM. Refining throughput came in line with our estimate at 18.8 mmt. In the marketing segment, domestic sales volumes were also in line at 23.3mmt in 1QFY24.
The brokerage noted that IOCL was set to commission various projects over the next two years, driving further growth.
“The company is likely to benefit the most among its peers from an increase in refining margin; however, reduction in Russian crude discounts may hurt IOCL. The stock trades at 4.2x consolidated FY24E EPS and 0.8x FY24E P/BV,” Motilal Oswal said.
It reiterated its ‘Buy’ rating on the stock, valuing IOCL at 0.9x FY25E P/BV to arrive at a target price of ₹110 per share.
Nuvama Institutional Equities
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 ₹115 per share.
ICICI Securities
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 ₹120 per share from ₹115 earlier.
At 10:15 am, IOC share price was trading 1.97% lower at ₹93.40 apiece on the BSE.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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