Synopsis: The summary provided discusses Indian Oil Corporation's (IOC) fourth-quarter performance, which failed to meet market expectations. It questions whether investors should buy, sell, or hold onto IOC stock in light of these results.
Indian Oil Corporation's stock experienced a decline of over 4% on Tuesday following its Q4 results, which failed to meet market expectations. Despite this setback, IOC shares have shown considerable growth, surging over 30% since the beginning of 2024 and more than doubling in value over the past year.
For the quarter ending March 2024, IOC reported a 40% sequential decrease in standalone net profit, amounting to INR4,837.69 crore compared to INR8,063.39 crore in the previous quarter. The company's revenue from operations also saw a slight decline of 1.4% quarter-on-quarter, totaling INR2.19 lakh crore.
IOC's EBITDA fell by 33% quarter-on-quarter to INR10,435 crore, missing consensus estimates by the same margin. This decline was primarily attributed to weaker performance in refining and petrochemicals, although it was partially offset by robust retail margins. Additionally, Gross Refining Margins (GRM) experienced a significant decrease, falling by 45% year-on-year and 38% quarter-on-quarter to $8 per barrel.
In terms of segment-wise performance, IOC's Petroleum Products segment saw a sequential decline in EBIT to INR7,271.57 crore from INR11,428.88 crore, while the Petrochemicals segment reported an EBIT loss of INR399.75 crore compared to a profit of INR196.21 crore in the previous quarter.
Despite these challenges, the company's board recommended a final dividend of INR7 per equity share and approved an investment of INR1,303.75 crore in its subsidiary for the implementation of 1 GW installed capacity of Renewable Energy.
Brokerage firms have varied opinions on IOC's Q4 results and its share price outlook. Nuvama Institutional Equities anticipates near-term weak GRMs due to potentially low demand but maintains a positive long-term outlook. However, it suggests that the stock's current valuation may already reflect strong earnings growth observed in recent quarters. As a result, Nuvama Equities retains a 'Reduce' rating on the stock with an unchanged price target of INR151 per share.
Emkay Global Financial Services, on the other hand, slightly adjusted its EPS estimates for FY25-26 and revised its March 2025 target price to INR180 per share, indicating a 13% increase. The firm maintains an 'Add' rating on the stock, anticipating improvements in IOC's marketing business post-election cycle.
Despite these analyses, IOC shares closed 4.44% lower at INR168.95 apiece on Tuesday.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies. We advise investors to check with certified experts before making any investment decisions.
