25 June 2020
4QFY20 Results Update | Sector: Oil & Gas
IOCL
Estimate change
TP change
Rating change
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CMP: INR85
TP: INR145 (+70%)
Buy
Best placed among OMCs – value discount to peers would shrink
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
Y/E March
2020 2021E
Sales
4,844
3,721
EBITDA
168.2
335.5
Adj. PAT
94.3
138.6
Adj. EPS (INR)
10.3
15.1
EPS Gr. (%)
(45.4)
47.0
BV/Sh.(INR)
103.9
111.1
Ratios
Net D:E
0.9
0.9
RoE (%)
9.1
14.0
RoCE (%)
1.7
8.5
Payout (%)
NM
52.1
Valuations
P/E (x)
8.3
5.6
P/BV (x)
0.8
0.8
EV/EBITDA (x)
12.0
6.2
Div. Yield (%)
5.0
7.9
FCF Yield (%)
(31.1)
1.2
IOCL IN
9,181
800.7 / 10.8
158 / 71
-1/-17/-33
1873
2022E
4,476
404.3
187.2
20.4
35.0
121.2
0.8
17.5
10.1
50.7
4.2
0.7
5.1
10.4
14.8
IOCL reported higher-than-expected core GRMs, primarily due to discounts received
on crude during the quarter, in line with the GRMs of other Indian refiners.
After the plunge witnessed in crude prices for the quarter, prices recovered to
~USD40/bbl. We believe this would offer the company some relief in terms of
inventory gains going forward; however, the entire loss booked in 4QFY20 may
not be recovered. IOCL revalued inventory at ~USD36/bbl, which currently stands
~USD43/bbl.
For IOCL, the share of marketing in the total EBITDA increased to 32–40% over
FY19–20, from ~20% in FY17, offering a more diversified earnings mix. While
refining margins are dependent entirely on global macros, marketing margins are
more under the control of OMCs.
We continue to prefer IOCL despite the company having annual capex of ~INR260b
(the highest among OMCs); it is expected to report ~16% cumulative FCF yield in
FY21/FY22. Additionally, dividend yield appears attractive at 8–10%.
IOCL trades at 5.6x consol. FY21E EPS of INR15.1 (~42% discount to FY15–18) and
0.8x FY21E PBV (~11% discount to FY15–18). Reiterate Buy.
High inventory loss recorded…
The company posted huge inventory loss of INR185b (refining at INR162b
and marketing at INR23b) during the quarter. Adjusted EBITDA for inventory
stood at INR214.1b (v/s INR74.0b in 4QFY19 and INR50.3b in 3QFY20).
Reported EBITDA came in at INR29.3b and forex loss for the quarter was at
INR27.2b. Higher interest cost was offset by higher other income.
The company revalued its inventory at the end of the quarter and recorded
an exceptional item of INR113b (of which INR80b was refining and INR33b
was marketing); thus, PBT came in at loss of INR136.1b. IOCL stated that
total inventory loss of INR185b also includes revaluation loss.
IOCL has moved to a lower tax rate and re-measured its DTL. Reported PAT
stood at loss of INR51.9b.
Adj. PAT (for the exceptional item) came in at INR61.2b (v/s est. loss of
INR30.3b; gain of INR61b in 4QFY19 and INR23.4b in 3QFY20).
Refining:
IOCL reported GRM at -USD9.6/bbl (below our est. of -USD5.5/bbl).
However, refining inventory loss translates to loss of ~USD17.8/bbl. Thus,
core GRM stood at USD8.2/bbl (v/s est. of USD2; USD1.4 in 4QFY19 and
USD2 in 3QFY20). Refining throughput for the quarter was in line with est. at
17.1mmt (-1% YoY, -2% QoQ). Refining EBITDA stood at a loss of INR124.5b
(v/s gains of INR12.1b in 4QFY19).
Marketing:
Marketing sales were 5% below est. at 19.2mmt (-7% YoY, -6%
QoQ), while the marketing margin came in at INR9.4/lit (+41% YoY, 2x QoQ).
Marketing EBITDA stood at gain of INR23.3b (v/s INR68.5b in 4QFY19).
Petchem:
Sales were flat YoY at 0.66mmt, while EBITDA/mt declined 54%
YoY to USD99/mt (-40% QoQ). This was weighed by margin contraction due
to demand destruction in an already oversupplied market. Petchem EBITDA
came in at INR4.8b (v/s INR10.1b in 4QFY19).
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Mar-20 Dec-19 Mar-19
51.5
51.5
52.2
13.5
13.9
13.8
7.2
7.6
7.0
27.8
27.0
27.0
…thus, core GRM stands at USD8.2/bbl
FII Includes depository receipts
Swarnendu Bhushan- Research Analyst
(Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529
Sarfraz Bhimani - Research Analyst
(Sarfraz.Bhimani@MotilalOswal.com); +91 22 6129 1566
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
IOCL
Pipeline
EBITDA was at INR15.4b (v/s INR15.9b in 4QFY19), with the total
capacity utilization of the pipeline at 88.0% (v/s 95% in 3QFY20).
For FY20, reported EBITDA was lower by 36% YoY at INR227.3b, while adjusted
EBITDA was up 24% at INR387.2b. Reported PAT came in at INR13.1b, and adj.
PAT stood at INR126.2b (-25% YoY).
Refining throughput was down 3% YoY to 69.4mmt, whereas marketing sales
came in flat YoY at 79mmt.
The company has not declared final dividend; however, interim dividend of
INR4.25/share was announced in FY20.
Refinery throughput stands at ~90% in June (up from ~55% at the start of May),
and IOCL expects to achieve full utilization by July.
MS and HSD demand in June has improved to 85–90% of normal demand (up
from ~70% in May). On the other hand, ATF demand has been heavily impacted
for May/June and stands at ~17%/31% of normal levels. LPG saw robust
demand, led by various schemes announced by the government.
The company declared force majeure on various Middle Eastern crude suppliers.
IOCL also cancelled/diverted various crude parcels on mutual agreement with
suppliers. IOCL parked ~7m bbls of oil in Strategic Petroleum Reserve of India,
for which the company has received payment.
The Panipat naphtha cracker and Paradip polypropylene plant are now
operating at 100%. Petchem EBITDA was lower for the year due to shrinkage in
petchem spreads, along with shutdown at Paradip in 1QFY20, followed by NGT’s
order. The company expects PX/PTA production to improve in the current year
(FY21), thus aiding the Petchem business in FY21.
Work on various major projects has commenced on the ground.
Capex in FY20 was at ~INR280b, and capex guidance for FY21 stands at INR260b
(refining at ~INR40b; pipeline at ~INR45b; marketing at ~INR60b; petchem at
~INR23b; and others, incl. CGDs).
Debt stood at INR1,165b at the end of March, while the company believes it
should fall below INR1,000b by the end of FY21 (decline of ~INR260b from peak
debt in April). Debt increased as the company extended credit facilities to retail
outlet dealers, although these have now been fully recovered.
Government receivables stand at ~INR130b (~INR58.5b of this has been
recovered since April). Importantly, there is no subsidy on LPG prices by
government currently.
For IOCL, the share of marketing in the total EBITDA increased to 32–40% over
FY19–20, from ~20% in FY17, giving a more diversified earnings mix.
IOCL has traded at a huge discount in the past decade owing to its capex cycle.
Although, the company is now at the end of its capex cycle and we believe ROE
is set to double to ~17.5% in FY22 from ~9.1% in FY20.
The discount gap to peers should shrink, and we value it at 1.2x FY22 PBV (at par
with FY15–18 post the reform period) to arrive at target price of INR145.
Reiterate Buy.
FY20 – throughput and sales flattish YoY
Demand and throughput outlook
Financials snapshot and guidance
Valuation and view – Preferred pick among OMCs
25 June 2020
2
 Motilal Oswal Financial Services
IOCL
Standalone – Quarterly Earnings Model
Y/E March
Net Sales
YoY Change (%)
EBITDA
Margins (%)
EBITDA adj. for inventory and one-offs
Depreciation
Forex loss
Interest
Other Income
PBT before EO expense
Extra-Ord expense
PBT
Rate (%)
Reported PAT
Adj PAT
YoY Change (%)
Margins (%)
Key Assumptions
Refining throughput (mmt)
Core GRM (USD/bbl)
Domestic sale of refined products (mmt)
Marketing GM incld inv per litre (INR/litre)
E: MOFSL Estimates
1Q
1,294.8
22.8
143.8
11.1
65.1
17.9
18.1
10.3
5.9
103.4
0.0
103.4
33.9
68.3
68.3
155.2
5.3
17.7
3.4
20.5
5.2
FY19
FY20
FY19
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1,320.3 1,399.7 1,262.1 1,315.1 1,116.9 1,246.2 1,184.4 5,276.9
45.8
26.5
7.5
1.6 -15.4 -11.0
-6.2
24.4
93.8
15.3 100.4
82.6
47.1
68.3
29.3 353.3
7.1
1.1
8.0
6.3
4.2
5.5
2.5
6.7
50.9 122.7
74.0
64.0
58.9
50.3 214.1 312.7
18.1
18.6
20.6
20.9
21.0
21.9
23.9
75.1
26.2 -20.8
-8.4
-0.9
11.4
1.8
27.2
15.0
11.9
8.5
12.4
15.1
13.1
13.1
18.5
43.1
10.4
4.4
10.6
6.3
6.5
5.7
17.2
31.3
48.1
13.4
86.3
53.8
8.1
37.2 -23.1 251.3
0.0
0.0
0.0
0.0
0.0
0.0 113.0
0.0
48.1
13.4
86.3
53.8
8.1
37.2 -136.1 251.3
32.4
46.7
29.4
33.2
30.8
37.2
61.9
32.8
32.5
7.2
61.0
36.0
5.6
23.4 -51.9 168.9
32.5
7.2
61.0
36.0
5.6
23.4
61.2 168.9
-12.2 -90.9
16.9 -47.4 -82.6 226.3
0.3 -13.4
2.5
0.5
4.8
2.7
0.5
1.9
5.2
3.2
17.8
3.5
18.6
5.7
19.0
9.2
20.3
3.5
17.4
1.4
20.5
6.7
17.3
3.6
20.5
5.1
17.5
3.0
19.0
5.3
17.5
2.0
20.4
4.8
17.1
8.2
19.2
9.4
71.8
4.4
80.0
5.3
(INR b)
FY20 FY20 Var. vs
4QE
est.
4,862.6 937.2 26%
-7.9 -25.7
227.3 -2.0
NM
4.7 -0.2
387.2 68.4
NM
87.7 22.2
8%
39.4 14.8
59.8 13.8
35%
35.7
7.3
NM
76.1 -45.4 -49%
113.0
0.0
-36.9 -45.4
NM
135.5 33.3
13.1 -30.3
NM
126.2 -30.3
NM
-25.3 -149.6
2.6 -3.2
69.4
4.2
79.0
6.2
16.8
2.0
20.1
5.4
2%
NM
-5%
76%
Recent development in LPG augurs well for OMCs
In the current benign crude price environment (our est. USD40/bbl / USD50/bbl
for FY21/FY22E), we expect to see structural changes in the pricing of LPG and
kerosene, which may bid farewell to all under-recoveries in the petroleum
sector. A recent news
article
suggests the subsidy on LPG cylinders declined to
zero in May’20. IOCL in its concall stated there is currently no subsidy on LPG
prices by the government.
Raising prices or reducing subsidies on LPG cylinders augurs well for OMCs.
Effective 1
st
Jun’20, the price of non-subsidized LPG cylinders was also increased
(article). However, the government’s resolve would be tested if oil prices spike.
GRMs and outlook
The company expects GRM to remain subdued in 1QFY21 due to poor product
cracks, weighed by demand destruction; also, discounts from Middle Eastern
suppliers (enjoyed in 4QFY20) have come off.
However, improvement in product demand would translate into higher cracks,
leading to better GRMs in the latter part of the year. Also, refining throughput
and product marketing sales are recovering faster than expected.
IOCL revalued its inventory at ~USD36/bbl of product prices, which currently
stands ~USD43/bbl; thus, expect inventory gains in the current quarter
(1QFY21).
The company has also taken advantage of lower crude prices during the crisis
period. IOCL had inventory of ~11.4mmt on 1
st
May and ~10.2mmt on 1
st
June,
which is currently ~8mmt (at normalized levels).
25 June 2020
3
 Motilal Oswal Financial Services
IOCL
Estimates unchanged
The company has highlighted that refining throughput ramped up after a drop in
Apr’20 to ~90%. On the other hand, product sales demand has also revived and
is now only 10% lower than normal levels (up from being ~55% lower in Apr’20).
Our model was already in line with the aforementioned developments; we have
built-in FY21 refining throughput ~5% lower YoY at 66mmt (95% utilization v/s
100% in FY20) and marketing sales volumes 5% lower YoY at 75mmt (v/s our
assumption of average 5% YoY volume gains).
The normalization of irrational GRM and marketing margin would tend to occur
in the long term; thus, we have built-in GRM of USD5/bbl / USD6/bbl and
blended marketing margin of INR4.3/liter / INR4.3/liter for FY21/22E,
respectively.
Refining should contribute ~32% of IOCL consol. EBITDA in FY22E, implying a
normalized GRM scenario of USD6/bbl. Our calculation suggests IOCL requires
INR0.5/liter of incremental gross marketing margins on auto fuels for the full
year to offset decline of USD1/bbl in GRM.
Exhibit 1: Key Assumptions
Y End: March 31
Exchange Rate (INR/USD)
Brent Crude (USD/bbl)
Domestic direct sales refined pdts (MMT)
YoY (%)
Reported GRM (USD/bbl)
Singapore GRM (USD/bbl)
Prem/(disc) (USD/bbl)
Refining capacity utilization (%)
Total Refinery throughput (MMT)
YoY (%)
Marketing Margin (INR/ltr)
Blended gross marketing margin incld inventory
Cons EPS
2015
61.4
86
68
1%
0.3
6.4
(6)
99%
53.6
1%
4.6
3.5
2016
65.5
48
73
6%
5.1
7.5
(2)
98%
56.7
6%
3.7
11.6
2017
67.1
49
74
2%
7.8
5.8
2
94%
65.2
15%
4.2
22.2
2018
64.5
58
77
4%
8.5
7.3
1
100%
69.0
6%
4.4
24.6
2019
70.0
70
80
4%
5.4
4.9
1
104%
71.8
4%
5.3
18.8
2020
70.9
61
79
-1%
0.1
3.8
(4)
100%
69.4
-3%
6.2
10.3
2021E
72.5
40
75
-5%
5.0
5.0
0
95%
66.0
-5%
4.3
15.1
2022E
73.3
50
78
4%
6.0
6.0
0
104%
72.0
9%
4.3
20.4
Source: Company, MOFSL
Exhibit 2: IOCL return ratios to double in next two years
RoE
21.2 21.0
13.4
15.0
4.7
4.7
10.3
14.4
10.0
15.3
9.1
8.5
10.1
RoCE
17.5
14.0
Exhibit 3: IOCL trades at ~36% discount to its LT PBV average
P/B (x)
Avg (x)
Max (x)
Min (x)
+1SD
-1SD
2.0
1.8
1.5
1.0
0.5
0.6
0.8
1.4
1.1
0.7
1.7
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E
Source: Company, MOFSL
Source: Company, MOFSL
25 June 2020
4
 Motilal Oswal Financial Services
IOCL
Exhibit 4: Domestic sales down 6.7% YoY and 6.1% QoQ (19.2 mmt)
20.5
19.3
17.3
19.8
19.0
18.5
18.0
19.7
19.7
18.6
20.3
20.5
20.5
19.0
20.4
19.2
1Q
2Q
FY17
3Q
4Q
1Q
2Q
FY18
3Q
4Q
1Q
2Q
FY19
3Q
4Q
1Q
2Q
FY20
3Q
4Q
Source: Company, MOFSL
Exhibit 5: Reported GRM of -USD9.6/bbl, inclusive of inventory loss of USD17.8/bbl
10.0
5.0
5.1
4.3
7.7
6.7
8.9
6.4
8.3
8.0
4.3
12.3
9.1
10.2
6.8
7.3
7.0
6.0
6.1
1.2
4.3
4.1
3.2
6.0
4.7
1.3
1.6
6.5
4.1
1.2
6.4
IOCL GRM
Singapore GRM
(9.6)
1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20
Source: Company, MOFSL
Exhibit 6: Refinery utilization at ~99.4% (17.1mmt)
Refinery thr'put (mmt)
16.1
15.6
16.4
17.1
17.5
16.1
18.2
17.2
17.7
17.8
19.0
17.4
17.3
17.5
17.5
17.1
1Q
2Q
FY17
3Q
4Q
1Q
2Q
FY18
3Q
4Q
1Q
2Q
FY19
3Q
4Q
1Q
2Q
FY20
3Q
4Q
Source: Company, MOFSL
25 June 2020
5
 Motilal Oswal Financial Services
IOCL
Story in charts
Exhibit 7: Refining throughput of IOCL
Refinery throughput (mmt)
56.7
65.2
69.0
71.8
69.4
66.0
72.0
7.8
6.4
7.5
5.1
0.3
5.8
Exhibit 8: GRM trend of IOCL
IOCL GRM (USD/bbl)
8.5
5.4
4.9
5.0
5.0
6.0
6.0
Reuters Singapore GRM (USD/bbl)
53.6
7.3
3.8
0.1
FY20
FY15
FY16
FY17
FY18
FY19
FY20 FY21E FY22E
Source: Company, MOFSL
FY15
FY16
FY17
FY18
FY19
FY21E FY22E
Source: Company, MOFSL
Exhibit 9: Marketing sales volumes
Domestic Sales Refined products (mmt)
6.1
0.9
68.5
72.7
74.1
2.0
77.1
4.1
80.0
79.0
75.1
3.7
(1.2)
(5.0)
FY15
FY16
FY17
FY18
FY19
FY20 FY21E FY22E
Source: Company, MOFSL
Exhibit 10: Pipeline throughput
Pipeline throughput (mmt)
78.1
4.0
3.3
5.5
3.3
3.9
3.4
-1.1
FY15
FY16
FY17
FY18
FY19
-5.1
80
82
86
89
88
YoY (%)
83
95
14.8
76
FY20 FY21E FY22E
Source: Company, MOFSL
25 June 2020
6
 Motilal Oswal Financial Services
IOCL
Financials and Valuations
Consolidated - Income Statement
Y/E March
Total Income from Operations
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income (incld forex)
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY15
44,83,152
93,424
2.1
52,190
41,234
41,746
53,975
53,463
16,681
70,143
21,426
30.5
49,120
32,439
-44.7
0.7
FY16
34,60,447
2,34,429
6.8
56,984
1,77,445
34,690
21,865
1,64,620
13,643
1,78,263
56,584
31.7
1,20,225
1,06,582
228.6
3.1
FY17
35,53,101
3,40,132
9.6
68,486
2,71,646
37,213
38,724
2,73,157
0
2,73,157
75,704
27.7
2,03,854
2,03,854
91.3
5.7
FY18
42,14,918
4,16,318
9.9
76,679
3,39,640
38,448
34,199
3,35,391
0
3,35,391
1,18,239
35.3
2,26,264
2,26,264
11.0
5.4
FY19
52,81,575
3,52,236
6.7
85,074
2,67,162
48,880
27,143
2,45,425
0
2,45,425
86,531
35.3
1,72,739
1,72,739
-23.7
3.3
FY20
48,43,623
1,68,245
3.5
1,02,745
65,500
65,787
27,903
27,615
-1,13,046
-85,431
-53,007
62.0
-18,763
94,283
-45.4
1.9
FY21E
37,20,784
3,35,471
9.0
1,07,900
2,27,571
74,710
26,249
1,79,111
0
1,79,111
42,457
23.7
1,38,631
1,38,631
47.0
3.7
(INR m)
FY22E
44,76,244
4,04,331
9.0
1,12,564
2,91,767
74,735
26,249
2,43,281
0
2,43,281
58,609
24.1
1,87,153
1,87,153
35.0
4.2
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY15
48,559
6,39,764
6,88,323
10,733
5,81,541
68,356
13,48,952
13,75,223
6,08,119
7,67,104
4,03,781
1,60,687
10,04,677
4,99,174
76,448
12,211
4,16,845
9,88,001
7,07,229
2,80,773
16,676
13,48,952
FY16
23,697
8,76,099
8,99,796
14,260
4,81,492
69,707
14,65,256
10,48,008
47,685
10,00,323
2,62,190
3,11,848
7,41,183
4,22,567
76,845
10,504
2,31,267
8,50,299
7,25,383
1,24,916
-1,09,116
14,65,256
FY17
47,393
9,73,568
10,20,961
19,046
5,88,300
68,887
16,97,194
12,71,518
1,11,950
11,59,568
1,67,784
4,36,872
9,71,376
6,58,843
88,992
4,098
2,19,443
10,38,417
8,15,492
2,22,925
-67,041
16,97,194
FY18
94,787
10,43,951
11,38,738
21,512
6,21,410
1,23,679
19,05,339
14,29,148
1,88,629
12,40,520
1,91,304
4,48,061
10,76,829
7,05,679
1,06,965
4,943
2,59,242
10,51,384
8,84,664
1,66,721
25,444
19,05,339
FY19
91,810
10,32,882
11,24,692
18,774
9,27,117
1,65,097
22,35,681
15,98,630
2,73,703
13,24,927
2,49,872
4,41,123
13,35,636
7,71,265
1,58,075
10,610
3,95,686
11,15,888
9,92,027
1,23,860
2,19,748
22,35,681
FY20
91,810
8,62,169
9,53,979
8,763
12,59,681
1,14,393
23,36,815
18,46,659
3,76,448
14,70,211
3,11,908
3,55,709
11,59,530
6,70,108
1,32,595
22,960
3,33,868
9,60,553
8,48,491
1,12,062
1,98,977
23,36,815
FY21E
91,810
9,28,579
10,20,389
8,763
13,22,665
1,14,393
24,66,209
22,14,685
4,84,348
17,30,337
1,80,882
3,55,709
9,77,668
5,21,829
1,11,644
23,480
3,20,715
7,78,397
6,66,334
1,12,062
1,99,271
24,66,209
FY22E
91,810
10,20,785
11,12,596
8,763
13,22,665
1,14,393
25,58,416
24,59,390
5,96,911
18,62,479
1,36,176
3,55,709
11,17,582
6,27,665
1,34,312
44,097
3,11,508
9,13,541
8,01,479
1,12,062
2,04,041
25,58,416
(INR m)
25 June 2020
7
 Motilal Oswal Financial Services
IOCL
Financials and Valuations
Ratios
Y/E March
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/Equity
FY15
3.5
9.2
75.0
1.7
39.3
24.1
9.2
1.1
0.3
14.5
2.0
40.0
4.7
4.7
3.1
3.3
3.3
41
6
58
1.0
1.0
0.6
FY16
11.6
17.8
98.0
3.1
28.7
7.3
4.8
0.9
0.4
5.3
3.7
12.2
13.4
10.3
14.7
3.3
2.4
45
8
77
0.9
5.1
0.2
FY17
22.2
29.7
111.2
11.5
62.4
3.8
2.9
0.8
0.4
4.0
13.5
9.8
21.2
15.0
19.9
2.8
2.1
68
9
84
0.9
7.3
0.1
FY18
24.6
33.0
124.0
11.5
54.6
3.5
2.6
0.7
0.3
3.4
13.5
9.3
21.0
14.4
18.7
2.9
2.2
61
9
77
1.0
8.8
0.1
FY19
18.8
28.1
122.5
9.3
57.5
4.5
3.0
0.7
0.3
4.8
10.9
-12.8
15.3
10.0
12.4
3.3
2.4
53
11
69
1.2
5.5
0.4
FY20
10.3
21.5
103.9
4.3
-243.3
8.3
4.0
0.8
0.4
12.0
5.0
-26.5
9.1
1.7
1.6
2.6
2.1
50
10
64
1.2
1.0
0.9
FY21E
15.1
26.9
111.1
6.7
52.1
5.6
3.2
0.8
0.6
6.2
7.9
1.1
14.0
8.5
9.8
1.7
1.5
51
11
65
1.3
3.0
0.9
FY22E
20.4
32.6
121.2
8.8
50.7
4.2
2.6
0.7
0.5
5.1
10.4
12.6
17.5
10.1
11.3
1.8
1.7
51
11
65
1.2
3.9
0.8
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments
Inc/(Dec) in Debt
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY15
70,144
52,190
-21,425
3,72,225
4,73,133
4,62,147
-94,988
3,67,159
-2,17,542
-3,12,529
-3,35,456
-16,020
-1,79,780
-30,162
37,044
6,882
FY16
1,78,263
56,984
-56,584
89,976
2,68,638
2,83,712
-1,71,425
1,12,287
65,511
-1,05,914
-72,377
-28,675
-1,74,178
3,621
6,882
10,503
FY17
2,73,157
68,486
-75,704
-48,481
2,17,458
2,23,038
-1,33,324
89,714
-1,25,025
-2,58,349
1,06,808
-1,05,454
28,904
-6,406
10,503
4,097
FY18
3,35,391
76,679
-1,18,239
-91,640
2,02,191
2,66,094
-1,81,151
84,944
-11,188
-1,92,339
33,110
-1,05,582
-72,910
846
4,097
4,943
FY19
2,45,425
85,074
-86,531
-1,88,637
55,332
1,10,594
-2,28,050
-1,17,456
6,938
-2,21,112
3,05,707
-84,925
1,16,184
5,666
4,943
10,609
FY20
-85,431
1,02,745
53,007
33,121
1,03,443
66,399
-3,10,065
-2,43,665
85,414
-2,24,651
3,32,563
-39,019
1,70,602
12,350
10,609
22,960
FY21E
1,79,111
1,07,900
-42,457
226
2,44,779
2,46,757
-2,37,000
9,757
0
-2,37,000
62,984
-61,730
-9,237
520
22,960
23,480
FY22E
2,43,281
1,12,564
-58,609
15,847
3,13,083
3,15,564
-2,00,000
1,15,564
0
-2,00,000
0
-81,155
-94,947
20,617
23,480
44,097
25 June 2020
8
 Motilal Oswal Financial Services
IOCL
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOFSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
25 June 2020
9
 Motilal Oswal Financial Services
IOCL
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
25 June 2020
10