Centrum Broking: Covid-19 Takes Its Toll On Indian Oil’s Quarterly Performance

Centrum Broking Report

Indian Oil Corp. Ltd. reported Ebitda/profit after tax at Rs 55.1 billion/Rs 19.1 billion (down 29/down 39% YoY), above our estimate Ebitda/profit after tax Rs 37.3/Rs 3.3 billion despite weak operational metrics.

The beat was largely driven by low other expenses of Rs 70.5 billion (down 15/down 44% YoY/QoQ), below our estimate Rs 105 billion driven by low power and fuel consumption as well as lower repair and maintenance costs.

Indian Oil reported weak gross refining margins (GRMs) at negative approximately 2 U.S. dollar per barrel of oil (bbl) our estimate 2.3 U.S.dollar/bbl impacted by inventory loss of 6.4 U.S. dollar/bbl versus our estimate of an inventory gain 1.8 U.S. dollar/bbl, resulting in core GRMs at 4.5 U.S. dollar/bbl (our estimate 0.5 U.S. dollar/bbl).

Marketing volumes of 16.5 metric tonne (down 27% YoY, our estimate 18 mt) also remained weak due to Covid-19 impact.

However, higher than expected refining throughput of 12.9 mt (down 25% YoY, our estimate 12.5mt) and higher blended marketing margins of Rs 7326 per tonne (up 55% YoY, our estimate Rs 6054 per tonne) supported earnings to some extent.

Gross debt for Indian Oil in Q1 stood at Rs 986 billion, up 37/down 15% YoY/QoQ.

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