All content in this website is sourced legitimately

Article Details
IOC: Riding high
Feb 22:   Brokerages are bullish on IOC's performance going ahead. Here are the reasons:
8(a) GRMs are on track for a US$ 2/bbl improvement from Q1FY18, as Paradip utilisation improves to >95% (from 85% now); (b) marketing EBITDA is guided to hold steady at Rs 20bn per quarter on cost reduction; and (c) future investments will mostly cater to efficiency gains across the value chain (refinery, marketing), while greenfield investments have peaked out.
 Paradip to bump up GRMs by ~US$ 2/bbl: IOCL’s Paradip refinery is on track to attain >95% utilisation levels in Q1FY18.  Expectation is for ~US$ 11/bbl GRMs for Paradip considering its product slate advantage (80% output comprises diesel and petrol). With operating costs at ~US$ 2/bbl, this refinery would prove more efficient than peers Bina (BPCL-Oman Oil JV) and Bhatinda (HPCL-Mittal Energy JV).
8Sustained benefits from cost reduction in marketing business: IOCL has consciously worked towards reducing logistic costs, especially for product sales to eastern parts of the country. Commissioning of incremental pipeline capacities and the start-up of its Paradip refinery (making it cost-effective to deliver marketing volumes to eastern India) have been major factors in the cost reduction. About 40% of product sales from Paradip would be through pipelines once the Paradip-Raipur-Ranchi pipeline is fully commissioned in Q1FY18. Marketing EBITDA at Rs 20bn per quarter looks sustainable (Rs 1,000/MT, excluding inventory adjustments).
8Diversification remains biggest strength: Competition from private refiners will have the least impact on IOCL considering (a) marketing EBITDA is 20% of the total (vs. 50-60% for HPCL/BPCL), (b) marketing EBITDA/unit is the lowest among OMCs and (c) refining earnings (50% of total EBITDA) will remain the primary growth driver post efficiency gains, while pipelines and petrochemicals (~30% of total) provide stability. ROE looks sustainable at >20% levels.
Click on Reports for more


Back  |  Top
The content in this website is authentic and all information is sourced legitimately. The news we produce is collated through journalistic effort that is legal and legitimate. We carry no information that violates Indian law or is a breach of confidentiality in any form or manner.
Copyright 2018 All rights reserved