IOC’s Q4FY22 standalone Ebitda at Rs 116 bn (+18% q-o-q, -14% y-o-y) was 27/3% under our/Bloomberg consensus estimate. Overall advertising and marketing gross sales quantity was 2% above our estimates, whereas blended Ebitda margin at $5/bbl (vs $4.4 in Q3) was under our estimate of $7/bbl, doubtless on decrease stock acquire/advertising and marketing margins. But, lowered disclosures on stock adjustments for each refining and advertising and marketing (since Q4FY21) and phase Ebitda (stopped from Q4FY22) makes segmental evaluation troublesome, given the doubtless excessive impression of stock adjustments (Brent up $37/bbl q-o-q over the previous 42 days). This fall standalone PAT at `60 bn (+3% q-o-q, -31% y-o-y) was 12/38% under consensus/our estimate on decrease Ebitda, decrease different revenue and better curiosity expense (+64% q-o-q).
For FY22, IOC’s standalone Ebitda at Rs 432 bn was up 14% y-o-y as greater refining margin and stock features offset weaker advertising and marketing margins, whereas standalone adjusted PAT at Rs 242 bn was up 3% y-o-y, pushed by a pointy 56% y-o-y enhance in curiosity bills.
Refining: Overall weaker on decrease reported GRM; core greater
Refining throughput of 18.3mmt (+5% q-o-q) was 2% above our estimate. IOC reported This fall GRM of $18.5/bbl (vs Q3: $12.0/bbl) on energy in transportation gas cracks and certain excessive stock features. It reported fixed worth or core GRM (stripped off stock change impression) of $13.6/bbl (vs $8.9/bbl in Q3). This implies a listing acquire of $5/bbl, which in our view is considerably under-stated.
Marketing: Sales quantity greater; however advertising and marketing doubtless in loss
Total advertising and marketing quantity at 23.3mmt (+3% y-o-y) was 2% above our estimate, whereas petroleum product gross sales (together with exports) was up 4% y-o-y at 21.7mmt and was 2% above our estimate. With key state elections in Mar’22, OMCs had saved retail gas worth unchanged for nearly total This fall, regardless of the surge in Brent costs and product cracks, resulting in vital losses on retail petrol/diesel gross sales. On our estimates, gross advertising and marketing margin doubtless declined sharply from $7.1/bbl in Q3 to ~$4.4/bbl in Q4FY22. Adjusted for the stock acquire, core advertising and marketing margin was doubtless even weaker at $1.6/bbl in This fall.
Marketing losses to widen in Q1FY23FOMCs have raised auto gas costs by Rs 10/l since end-Mar, however costs stay unchanged for over a month, regardless of the sharp enhance in worldwide costs, resulting in OMCs’ losses on retail gas gross sales rising to ~Rs 11/12 in latest weeks, on our estimates. We count on OMCs’ advertising and marketing losses to widen in Q1FY23F.
With the energy in transportation gas cracks, SG complicated margins have surged to ~$20/bbl on common in Q1 to this point (vs $7.8/bbl in This fall) and will present some offset for OMCs’ advertising and marketing losses.
Valuation: We worth varied segments on common FY23-24F EV/Ebitda. We retain Buy with an unchanged TP of Rs 160. The inventory trades at 0.87x FY23F P/B and 6.2x FY23F EV/Ebitda.
Source: www.financialexpress.com”