Accmulate Indian Oil Corporation Ltd For Target Rs.145 by Prabhudas Liladhar Capital Ltd
Strong Q4 beat; Q1FY27 to remain challenging
Refining throughput increased marginally to 19.7mmt from 19.4mmt QoQ, while domestic sales volumes grew 6.0% YoY to 23.3mmt. Management did not disclose Q4FY26 and FY26 GRMs due to ongoing volatility arising from West Asia disruptions. Standalone EBITDA improved sharply to INR226.1bn, significantly ahead of estimates (PLe: INR161.4bn; BBGe: INR146.5bn), compared with INR212.9bn in Q3FY26 and INR137.1bn in Q4FY25. Standalone PAT also rose sharply to INR113.8bn (PLe: INR86.4bn; BBGe: INR85.4bn) vs INR121.3bn in Q3FY26 and INR72.6bn in Q4FY25. Management guided FY27 capex at INR327bn, with ~50% allocated toward refining & pipeline projects. Planned refinery shutdowns in FY27 are expected to limit throughput to ~75mmtpa. Price hikes of INR3.9/ltr implemented in May’26 provide some relief; however, they remain insufficient to fully offset the under-recoveries in MS/HSD, suggesting a possibility of further price hikes if disruptions in West Asia persist. Given the current weakness, we revise our valuation multiple to 0.8x FY28E (from 0.9x) and reiterate “Accumulate” rating, with a revised target price of INR145 (earlier INR163).
Throughput increased QoQ and YoY:
Refining throughput increased to 19.7mmt in Q4FY26 compared with 19.4mmt in Q3FY26 and 18.5mmt in Q4FY25. Management did not disclose Q4FY26 and FY26 GRM due to current volatility.
Q4FY26 EBITDA/PAT improves:
IOCL reported an EBITDA of INR226.1bn, up 6.2% QoQ and 64.9% YoY driven by increase in sales and lower other expenses. PAT improved to 56.6% YoY but declined 6.2% QoQ to INR113.8bn. Performance was largely attributable to higher cracks amid stable GMM in Jan’26 and Feb’26. Part of the improvement in performance is due to an expected inventory gain owing to the rise in crude oil prices in Mar’26.
Petrochem losses improved:
Sale of petrochemicals stood at 0.9mmt during the quarter, flat QoQ and up from 0.8mmt in Q4FY26. IOCL reported an EBIT of INR12.1bn vs loss of INR3.6bn in Q3FY26 and INR2.0bn in Q4FY25 largely due to improved spreads of certain products amid West Asia disruptions
Concall Highlights:
1) Project update - Panipat expansion (15 to 25mmtpa): Rs270bn spent out of total Rs380bn; completion expected by Dec’26. Gujarat expansion (13.7 to 18mmtpa): Rs135bn spent out of INR180bn; completion expected by Nov-Dec’26. Barauni expansion (6 to 9mmtpa): commissioning timeline remains similar, to be completed by Aug’26. Ramp-up assumptions: 60% utilization in Year 1, 80% in Year 2, and 100% in Year 3.
2) Guidance - FY27 capex expected at INR327bn: ~50% allocated toward refining and pipelines, while Rs50bn is earmarked for renewables. Planned refinery shutdowns in FY27 are expected to limit throughput to ~75mmtpa.
3) LPG under-recovery - LPG under-recoveries stood at INR100/cyl in Q4FY26, INR171/cyl in Apr’26, and increased sharply to INR617/cylinder in May’26. Current LPG buffer remained at INR232bn, while FY26 LPG under-recoveries stood at INR92.1bn.
4) Other insights - Management did not disclose Q4FY26 GRMs due to heightened market volatility. Indian basket crude realization increased ~30% QoQ. Refinery utilization remained strong at 107% in FY26. Product sales volume reached 105mmt in FY26, up 5% YoY. Exported LNG to Nepal for the first time during FY26
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SEBI Registration No. INH000000271Accumulate Paradeep Phosphates Ltd For Target Rs.141 by Prabhudas Liladhar Capital Ltd
