Indian Oil (IOC) reported a net sales growth of 7.4% yoy on back of 2.2% rise in market sales and 5.2% surge in realizations. Budgetary support received in the quarter was Rs134.8bn vis-à-vis Rs164.2bn received in Q3FY12 and sans the government payout the topline growth was noted higher at 12% yoy. In the product sales while the domestic sales increased by 1.2% yoy exports surged by 21.6% yoy.
In the quarter while government payout was Rs134.8bn, the upstream companies paid Rs81.5bn in form of discounts on raw materials. The net under recoveries for IOCL for the first nine months of FY13 stood at Rs132.3bn vis-à-vis Rs85.1bn in the same period last year.
The refinery throughput was 14.2mt implying a 0.3% rise on yoy basis but a strong recovery sequentially (+8.3% qoq). Pipeline throughput was 19.47mt and was higher 6.1% yoy.
It was a good performance in the refining section wherein IOCL improved its quarterly GRM to $6.1/bbl from $5.2/bbl in the Q2 FY13 despite the weakness in the benchmark Singapore refining margins. The cumulative nine month GRM’s were reported at $2.2/bbl vis-à-vis $3.41/bbl in the same period last year.
The interest expenditure continued to surge higher (+6.8% yoy; +10.7% qoq) on high debt levels and siphoned a significant part of the operating profits.
The recent government moves on partial de-regulation of diesel and capping of number of subsidized LPG cylinders available to each household will cause marked reduction in gross under recoveries. Nevertheless, sustainability of these reforms in FY14 looks difficult considering that general elections will be round the corner. We continue to rate the stock as Market performer with an upwardly revised 9-month target price of Rs345.
|As a % of net sales||Q3 FY13||Q3 FY12||bps yoy||Q2 FY13||bps qoq|
|(Rs m)||Q3 FY13||Q3 FY12||% yoy||Q2 FY13||% qoq|
|OPM (%)||4.7||10.4||(572) bps||10.9||(626) bps|
|Extra ordinary items||-||(61,682)||(100.0)||-|
|Adj. PAT margin (%)||2.9||2.3||57 bps||9.1||(618) bps|
|Ann. EPS (Rs)||54.9||41.0||33.9||158.3||(65.3)|
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