Indian Oil Corporation (Q2 FY13)

India Infoline News Service | Mumbai |

Indian Oil Corporation (Q2 FY13)

CMP Rs262, Target Rs280, Upside 6.9%
 
  • Indian Oil (IOC) reported a profit of Rs96.1bn in Q2 FY13 as compared to a loss of Rs75bn in Q2 FY12. The key driver for this has been government compensation of Rs161bn being accounted (not received) for H1 FY13 during the quarter. GRMs have also been better in line with recovery in benchmark Singapore GRMs. Furthermore, inventory gains improved the performance of the refining division.

  • The company reported net sales of Rs1,060bn which was 18.9% up on yoy basis and 9.4% increase over the trailing quarter. Apart from government compensation being accounted for, higher market sales and increased prices of petrol and diesel propelled topline growth.

  • While the government has not paid its part of compensation, the accounting is for only 35% of the gross under recoveries for H1 FY13. This leaves nearly 30% for the OMCs to bear. Consequently, the company has resorted to higher debt funding leading to 2% yoy increase in interest cost.

  • The refinery throughput was 13.1mt, which implied a 0.5% rise on yoy basis. Pipeline throughput was higher by 3.8% yoy to 18.44mt.

  • Foreign exchange gain of Rs23bn in Q2 FY13 as compared to a loss of Rs23bn in Q2 FY12 also helped bottomline performance.

  • With the timing of cash subsidy uncertain, the OMC’s are expected to report vastly fluctuating earnings going ahead. We maintain a Market Performer rating on the stock.

Cost analysis
As a % of net sales Q2 FY13 Q2 FY12 bps yoy Q1 FY13 bps qoq
Raw material 37.1 51.7 (1,455) 60.2 (2,307)
Manufacturing Expenses 47.2 45.3 195 50.6 (337)
Personnel Costs 1.1 1.3 (18) 1.4 (24)
Other overheads 3.6 7.7 (407) 8.4 (481)
Total costs 89.1 105.9 (1,686) 120.6 (3,149)
Source: Company, India Infoline Research

Result table

(Rs m) Q2 FY13 Q2 FY12 % yoy Q1 FY13 % qoq
Net sales 1,060,012 891,851 18.9 968,967 9.4
Material costs (393,283) (460,680) (14.6) (583,006) (32.5)
Purchase (500,545) (403,738) 24.0 (490,231) 2.1
Personnel costs (12,074) (11,800) 2.3 (13,316) (9.3)
Other overheads (38,494) (68,696) (44.0) (81,835) (53.0)
Operating profit 115,616 (53,063) (317.9) (199,421) (158.0)
OPM (%) 10.9 (5.9) 1686 bps (20.6) 3149 bps
Depreciation (12,865) (12,638) 1.8 (12,775) 0.7
Interest (15,108) (14,840) 1.8 (18,491) (18.3)
Other income 8,470 5,686 49.0 6,178 37.1
PBT 96,113 (74,856) (228.4) (224,510) (142.8)
Tax - - - - -
Effective tax rate (%) 0.0 0.0   0.0  
Reported PAT 96,113 (74,856) (228.4) (224,510) (142.8)
PAT margin (%) 9.1 (8.4) 1746 bps (23.2) 3224 bps
Ann. EPS (Rs) 158.3 (123.3) (228.4) (369.9) (142.8)
 Source: Company, India Infoline Research
BSE 404.40 [0.20] ([0.05]%)
NSE 404.75 [0.10] ([0.02]%)

***Note: This is a NSE Chart

 

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