Indian Oil Q4 Preview: Profit May Fall 11% Sequentially
The consensus estimates of analysts polled by Bloomberg estimate a sequential drop across the company's financial metrics. However, brokerages have a mixed view.
Indian Oil Corp. might post weak fourth-quarter earnings. While most brokerages expect a dip in the oil marketer's gross refining margins, crude discounts are expected to help with healthy gross marketing margins.
Net profit of the public sector undertaking may fall 11% quarter-on-quarter to Rs 7,351.98 crore in the quarter ended March 2024, according to Bloomberg consensus estimates as of April 24.
The oil marketer's Ebitda is expected to be flat sequentially; however, margins are expected to improve by 30 basis points.
Indian Oil Corp. Q4 Estimates (Standalone, QoQ)
Revenue may fall 3.5% to Rs 1.92 lakh crore.
Ebitda may fall 0.9% to Rs 15,635.6 crore.
Margin may expand to 8.2% vs 7.9%.
Net profit may fall 11% to Rs 7,352 crore.
Financial Metrics
The consensus estimates of analysts polled by Bloomberg estimate a sequential drop across the company's financial metrics.
However, brokerages have a mixed view.
Nomura expects the oil marketing companies to deliver a strong quarter in Q4 FY24 due to benefits from a sequential increase in refining markets, robust growth in marketing margins, and inventory gains. The brokerage expects Indian Oil's Ebitda to rise 20% quarter-on-quarter to Rs 18,600 crore.
However, Dart Research expects the company's Ebitda to decline 3% quarter-on-quarter due to a fall in gross refining margins, reduced benefits of Russian crude discounts, and weak petrochemical margins.
Gross Margins
Nomura expects refining margins for the OMCs to increase quarter-on-quarter, underpinned by the increase in gasoline and diesel cracks. The brokerage estimates refining margins at $13.6 per barrel, compared to $13.5 per barrel in the previous quarter.
Elara Capital, however, expects Indian Oil Corp.'s average gross refining margins to dip to $8.7 per barrel in Q4 from $9.3 per barrel in Q3.
On the retail front, Nomura expects a 65% sequential increase in the marketing margins of the OMCs to go above normative levels of Rs 4.8 per litre.
Elara Capital and Dart Research also expect an increase in gross marketing margins. Elara Capital expects the OMC's to see a Rs 4.1 per litre gain sequentially for diesel and a Rs 0.3 per litre gain for petrol during the quarter. Dart Research expects gross marketing margins on auto fuel to be super normal at Rs 4.2 per litre in Q4.