Indian Oil posts record profit of over Rs 21,000 crore in FY21; should you invest?

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Shares of India’s largest oil marketing company Indian Oil Corporation (IOC) hit a 52-week high of 109.70 apiece on the NSE after the company reported stellar performance for the fiscal year ended March 2021.

State-run oil refiner on May 19 declared a net profit of Rs 21,836 crore on a standalone basis for FY2021 up 17 times against Rs 1,313 crore posted in the year ago period.

IOC’s management attributed the increase in profit to inventory gains, which came from fluctuations in global oil prices and rising sales of high-margin petrochemical products.

“Our refining throughput for FY21 was 62.351 million tonnes (mt) and the throughput of the corporation’s countrywide pipelines network was 76.019 mt,” said IOC Chairman SM Vaidya.

On a quarterly basis, IOC posted a standalone profit of Rs 8,781.3 crore in the quarter ended March 2021, up 78.6% sequentially from Rs 4,916.59 crore in the previous quarter. The standalone revenue from operations grew by 11.6% to Rs 1,63,605.67 crore during the period under review.

Brokerages are upbeat on the stock. Here is what they have to say

Morgan Stanley | Target price: Rs 139 | Upside: 29%

The core earnings should raise investor confidence in earnings delivery. The global brokerage firm expects the integrated margins of the company to rise further.

JPMorgan | Target price: Rs 147 | Upside: 37%

The company reported a large beat on the earning front driven by inventory gains. Expect a sharp improvement in the company’s underlying operating performance, while risk-reward remains attractive.

ICICI Securities | Target price: Rs 110 | Upside: 3%

Raise FY22E EPS by 4% and target price by 5% to Rs110 (3% upside) mainly on an upgrade in petrochemical EBITDA to reflect the recent margin strength and outlook.

(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)