Indore Stock：Indian Oil shares fall after analysts cut price targets post Q2 earnings miss
Shares of Indian Oil Corporation Ltd. (IOC) were trading with losses of as much as 3% on Tuesday, October 29, after the state-run oil refiner posted a nearly 99% drop in its second-quarter profit, as narrowing marketing margins hurt.
IOC❼standalone net profit fell to 180 crore for the three months ending September 30.
Out of the 32 analysts that have coverage on IOC, 13 of them have a ❜ll✩ating on the stock with price targets ranging to as low as ₹110, to as high as ₹252.Indore Stock
Global brokerage firm CLSA has an ❞derperform✩ating on IOC, with a price target of 120 per share.Kanpur Wealth Management
The Q2 profit after tax (PAT) was a big disappointment as against estimates, as a miss in marketing margins and larger-than-expected inventory losses pulled core profit before tax (PBT) into negative territory. However, a one-time provision write-back supported the reported PAT.
The global brokerage has reduced FY25-27CL PAT estimates by 6%-20%, factoring in the current shortfall and expectation of a big jump in marketing margins.
Continued weak performance, along with a possibility of a retail fuel price cut or an excise duty hike are negative catalysts for the stock, CLSA highlighted.
Citi, which has a ❋y✩ating, and a price target of 190, said the state-owned firm❼Q2 EBITDA stood at 3,800 crore (-56% quarter-on-quarter), well below the 9,900 crore estimate. This aligns with similar challenges faced by peers, including weak refining, substantial inventory losses, and sustained LPG under-recoveries.Nagpur Investment
Reported net income was 180 crore (down 93% qoq), also far below the 3,700 crore forecast, even after a 1,200 crore exceptional gain.
Citi has reduced its FY25 and FY26 EBITDA estimates by 11% and 7%, respectively, to reflect the first half performance but expects the underlying factors to see a sharp recovery in the second half of the fiscal year.
Nuvama Institutional Equities has retained its ❛duce✩ecommendation, with a price target of 135 per share.Guoabong Stock
“With peak earnings behind and further deterioration underway, our downgrade to ❛duce✩s panning out as per expectations,” the brokerage said.
IOC❼valuations remain expensive, close to its long-term average, reflecting the strong earnings growth of recent quarters; however, the risk-reward outlook appears unfavorable.
Nuvama believes that IOC❼earnings peaked in FY24 and are likely to deteriorate given weak near term refining margin environment and LPG under-recoveries.
The brokerage has cut its FY25 and FY26 EBITDA estimates by 37% and 14%, respectively.
According to Nuvama, IOC’s risk-reward is unfavorable, with the stock trading at 5.8 times its two-year forward Enterprise Value-to-EBITDA.Lucknow Investment
Jaipur Stock
