Motilal Oswal: Indian Oil Reports Well Packed Q1 Results; Debt Decreases
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Motilal Oswal Report
Indian Oil Corporation Ltd. reported better-than-expected margins on all fronts- refining (core at 4.4 U.S. dollar per barrel of oil), marketing (Rs 8.6 per liter) and petrochemical (Ebitda/metric tonne at 200 U.S. dollar), with in line refining throughput.
Marketing sales were 6% lower than estimate owing to impact of the Covid-19 led lockdown.
Despite the sharp crude price increase (from its multi-decade trough) during Q1 FY21, Indian Oil reported total inventory loss of Rs 32 billion owing to its longer inventory cycle.
However, margins led to a huge beat on our Ebitda estimates. Also, debt has decreased QoQ from Rs 1,165 billion to Rs 986 billion.
For Indian Oil’s share of marketing in total Ebitda increased from approximately 20% in FY17 to approximately 32-40% in FY19-20, reflecting a more diversified earnings mix.
While refining margins are dependent completely on global macros, marketing margins are more under the control of the Oil Marketing Companies (OMCs).
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