IOCL Q2FY22 Preview: Petroleum refining company likely to see 46-48% YoY growth in revenue; GRMs to be range-bound

Petroleum refining company Indian Oil Corporation to come out with its second-quarter earnings for the financial year 2021-22. The market analysts expect the bottomline to be mute, while the topline will show a growth of 46-48 per cent, similarly, the analysts also expect the margins to witness some pressure. 

YES Securities predicts that the company to report a 20 per cent decline in the year-on-year profit to Rs 49,848 crore; while the revenue of the company to jump nearly 48 per cent YoY to Rs 1,264,606 crore in Q2FY22. And, margins to slip by 316 basis points YoY during the July-September quarter of FY22. 

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In its preview prediction, YES Securities pointed out, “IOCL's earnings in Q2FY22 likely to be quarter-on-quarter (QoQ) lower on account of maintenance outage in its refineries, leading to lower throughout and weaker GRMs.” 

“In addition, the flood-like situation in multiple parts of the country could impact the sale of diesel. The marketing margins, however, are estimated to be stronger sequentially,” the brokerage firm said. 

It added, “the refining and marketing companies (OMCs, RIL) would likely benefit from improvement in MS cracks. However, a meaningful improvement in GRMs is less likely as HSD cracks were flat QoQ. In addition, the diesel sales during 2Q are likely to be under duress due to slower economic activity and the impact of the monsoon. QoQ, stronger marketing margins should nevertheless aid earnings for OMCs.” 

Elara Capital foresees the profit of the company to see a fall of 8.5 per cent YoY to Rs 56,956 crore; while the revenue would surge over 46 per cent to Rs 1,252,011 crore in the July-September quarter of FY22. And, the brokerage experts the margin to grow 15 per cent YoY but fall 1.4 per cent sequentially. 

It expects PSU refiners’ GRMs to be range-bound within $2.5-4/bbl and tread lower by $0.5-6.1/bbl YoY and $0.5-4.0/bbl QoQ, and OMCs’ diesel retail gross margin should improve by Rs 0.2/litre YoY to Rs 5.1/litre, though may be partly offset by gasoline margin dip of Rs 1.8/litre YoY to Rs 3.5/litre.  

(Disclaimer: The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)