Stock in Action- Indian Oil Corporation

IOC Stock Moment of Day 

Highlights

1. Indian Oil Corporation Ltd stock analysis reveals a significant drop in net profit despite rise in total income.

2. IOC Q1 FY25 financial performance shows 75% decline in standalone net profit compared to same quarter last year.

3. Indian Oil Corporation share price target set by Motilal Oswal is ₹215, indicating potential upside from current trading price.

4. IOC refining margins impact has been detrimental, with average gross refining margin falling to $6.39 per barrel.

5. IOC financial results July 2024 highlight decrease in revenue by approximately 2% compared to previous fiscal year.

6. IOC stock market news saw brief decline in shares post-results, but they recovered, closing up 1.42% at ₹182.95 on NSE.

7. Indian Oil Corporation earnings decline is attributed to shrinking refining margins & losses in LPG sales.

8. IOC quarterly revenue & profit showed decrease in revenue by 2% & 75% drop in net profit in latest fiscal quarter.

9. IOC investment outlook 2024 might be influenced by company's significant reduction in earnings & refining margins.

10. IOC LPG sales losses amounted to ₹5,156.53 crore due to gap between subsidized retail prices & actual costs.

Why IOC Share is in News?

Indian Oil Corporation Ltd. (IOC), a prominent player in Gas & Petroleum sector & one of India's largest companies with a market cap of ₹258,348.06 crore, has recently attracted significant attention. company's shares saw 1.55% increase to ₹180.2 on July 30, 2024, following release of its Q1 FY25 results. Despite this, IOC's stock performance has been volatile, reflecting broader market reactions & company-specific challenges. company’s standalone net profit witnessed sharp 75% decline compared to same quarter last year, driven by declining refining margins & significant losses in LPG sales. This news has prompted both scrutiny & cautious optimism among investors.

Q1-FY25 Performance of IOC Ltd 

1.    For Q1 FY25, IOC reported substantial drop in profitability & revenue. company's total revenue decreased by approximately 2% year-on-year to ₹2.15 lakh crore from ₹2.21 lakh crore.

2.    EBITDA fell by 55% to ₹11,024.51 crore. average gross refining margin (GRM) declined to $6.39 per barrel, down from $8.34 per barrel the previous year, significantly impacting the company's earnings. 

3.    Net profit dropped by 75%, from ₹14,735.3 crore in Q1 FY24 to ₹3,723 crore in latest quarter. This decline was exacerbated by ₹5,156.53 crore loss in LPG sales due to under-recoveries.

Fundamental Analysis of Indian Oil Corporation 

Revenue & Profit Trends

IOC's revenue for quarter that ended June 30, 2024, was ₹2,20,396.99 crore, marking a 10.14% increase from the previous quarter & 10.66% rise from the same quarter last year. However, this growth did not translate into improved profitability. company's net profit after tax (PAT) was ₹3,151.46 crore, reflecting a significant decrease in profitability.

Operating & Financial Metrics  

1. IOC's total operating expenses saw a slight decrease of 0.8% sequentially, while total revenue decreased by 1.77%. 

2. However, the decline in operating income was stark, down by 26.15% from the previous quarter & 71.26% year-on-year. 

3. Net income before taxes fell by 34.75% sequentially & 75.11% year-on-year, underscoring pressure on margins & Profitability.

Promoter & Institutional Holdings 

As of June 30, 2024, promoters held 51.5% of the company’s stake, with Foreign Institutional Investors (FIIs) owning 7.79% & Domestic Institutional Investors (DIIs) holding 10.01%. 

Indian Oil Corporation Price & Market Performance  

IOC's stock has experienced fluctuations, with recent trading showing a 1.55% rise on July 30, 2024. Despite the recent upturn, the stock has been under pressure due to weak financial performance. share price has been trading around ₹180.2, with 52-week high of ₹196.8 & low of ₹85.51.

What Caused Indian Oil Corporation's Weakness?

1. The first issue was refining segment's weakness, with an average gross refining margin of $6.39 per barrel for the quarter. Compared to the $8.34 per barrel level one year ago, this is 23.4% less. 

2. Decline in LPG sales was the second factor. LNG under-recoveries of Rs 5,156.53 crore were recorded by the company as result of a discrepancy between real cost & discounted retail selling price.

IOC Future Outlook

IOC's financial challenges, particularly in refining margins & LPG sales, are significant. company is addressing these issues with strategic initiatives, including the proposed construction of Greenfield Terminal in Bihar, costing ₹1,698.67 crore. Investors should monitor the company's ability to navigate these challenges & manage its operational & financial risks effectively.