Indian Oil Corporation Ltd

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Indian Oil Corporation Ltd.

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Indian Oil Corporation Ltd.

Industry LTP Recommendation Base Case Fair Value Bull Case Fair Value Time Horizon Refineries/ Petro-Products Rs. 76.8 Buy at LTP & add further on dips to Rs 69 Rs. 87 Rs. 92 2 quarters HDFC Scrip Code INDOIL Our Take: BSE Code 530965 IOCL’s marketing sales have improved from April 2020 lows but are still lower YoY. Fuel demand in July fell MoM due to localised lockdowns NSE Code IOC and monsoon. From September, fuel demand has improved MoM and in the first half of October, fuel demand has risen to pre Covid levels. Bloomberg IOCL IN Post excise duty hike in May 2020, IOC increased retail prices by Rs 9-12/litre, which has led to steady marketing margins. Rising prices CMP Oct 19, 2020 76.8 and/or reducing subsidies on LPG cylinder augurs well for the IOCL. Deregulating LPG would boost the working capital of IOCL. However, the Equity Capital (Rscr) 9414.2 government’s resolve would be tested if oil prices spike.

Face Value (Re) 10.0 Equity Share O/S (cr) 941.4 Global demand recovery is likely to remain capped in the near term with concerns over high inventory and further delayed recovery in Jet Market Cap (Rscrs) 72299.5 fuel demand. We expect crude throughput of 63.4/71.1mmt and GRM of USD 3.4/3.9 per bbl in FY21/22E as the economy recovers. OMCs Book Value (Rs) 103.90 are currently making marketing margin of ~Rs 3.5-4.5/liter on petrol-diesel, which is slightly higher than the long-term average. Avg. 52 Wk Volumes 953758 52 Week High 149.0 IOC expects to add 1000 outlets and also invest on upgrading existing outlets in fuel retailing. IOC is already setting up EV charging centers. 52 Week Low 71.15 Most of the new outlets will be added in class ‘B’ towns at a lower cost per outlet ~ typically Rs 0.50- Rs1 crore. The annual capex will go towards this expansion and support infrastructure like tankages, pipelines and surveillance as well as technology.

Share holding Pattern % (June, 2020) Valuations & Recommendation: Promoters 51.5 IOCL is well-placed to take advantage of the improved demand outlook as the economy opens up and can deliver overall throughput much Institutions 20.2 Non Institutions 28.3 higher than the industry average. As petroleum products are essential services, IOCL’s refining and marketing operations continued despite the lockdown and has got back to almost normalcy. Also we expect, further improvement in demand to normal levels, upon full lifting up of Total 100.0 the lockdown and stabilisation of economic activity. However, the net sales may remain subdued in Q2FY21. IOCL’s refining margins are likely to bottom-out in its cyclical downturn, going forward. We expect recovery in both margins as well as volumes. Its strong operational Fundamental Research Analyst profile driven by dominant market position supported by established marketing and distribution network and sizable refining capacity makes Abdul Karim us positive on the stock. [email protected] IOCL’s value of investments and non-core assets (Chennai Petroleum Corporation Ltd, Petronet LNG, Lanka IOC, ONGC, GAIL, OIL India other subsidiaries and JVs) account for nearly its entire value, indicating that the market is ascribing no or negligible value to its core refining and fuel marketing businesses. 2

Indian Oil Corporation Ltd.

Oil Marketing Companies are trading at close to five year lows in terms of Price to Book & at valuations similar to regulated regime (2009 - 2014) which had structural issues like no pricing freedom and subsidy concerns. In the current period, the low GRM due to depressed global demand is compensated by high marketing margins. Moreover, BPCL’s privatisation (as and when it happens) has the potential to significantly re-rate refining and marketing business of HPCL and IOCL.

Investors could buy the stock at the LTP and add on dips to Rs 69 (valuing refining, marketing and pipeline and Petchem businesses at 4.0, 4.0, 4.5 and 4.0 times EBITDA multiple +value of other listed and unlisted investments). Based on SOTP valuation, Base case fair value of the stock is Rs 87 (valuing refining, marketing and pipeline and Petchem businesses at 5.0, 4.5, 5.0 and 5.0 time EBITDA multiple +value of other listed and unlisted investments) and the bull case fair value of the stock is Rs 92 (valuing refining, marketing and pipeline and Petchem businesses at 5, 5, 5 and 5 time EBITDA multiple +value of other listed and unlisted investments) over the next 2 quarters.

Financial Summary Standalone Consolidated Particulars (Rs Cr) Q1FY21 Q1FY20 YoY-% Q4FY20 QoQ-% FY19 FY20 FY21E FY22E Total Operating Income 62396.6 130885.6 -52.3 118439.1 -47.3 5,28,148.9 4,84,362.3 3,30,505.1 3,75,614.7 EBITDA 5513.4 7723.9 -28.6 -11089.2 -149.7 35,226.9 5,525.6 18,312.0 25,278.4 Depreciation 2355.7 2093.6 12.5 2392.8 -1.6 8,506.5 10,274.5 9,452.7 9,749.5 Other Income 642.2 631.4 1.7 1722.3 -62.7 2,714.3 2,784.6 4,069.1 4,199.0 Interest Cost 1171.3 1509.1 -22.4 1850.4 -36.7 4,888.0 6,578.7 7,144.3 6,761.7 Tax 717.7 1783.3 -59.8 -8424.8 -108.5 8,653.1 -5,300.7 1,511.2 3,267.5 RPAT 1910.8 3596.1 -46.9 -8853.0 -121.6 15,893.7 -3,242.4 4,272.9 9,698.6 Diluted EPS (Rs) 2.1 3.9 -46.9 -5.6 -136.9 18.9 -5.0 6.3 12.0 RoE-% 15.4 -4.4 5.7 10.7 P/E (x) 4.1 -15.5 12.2 6.4 EV/EBITDA 4.4 33.6 9.2 6.6

(Source: Company, HDFC sec)

Indian Oil Corporation Ltd.

Q1FY21 Result Review IOCL numbers were inline in Q1FY21. Company reported 46.9 per cent (YoY) de growth in standalone net profit to Rs 1,910.8 crore due to an inventory loss of Rs 3,196 crore, while it reported improved bottomline performance on sequential basis, Company had reported net loss of Rs 8,853 crore in Q4FY20. Consolidated net revenue was down by 52.3 per cent (YoY) and 47.3 per cent (QoQ) to Rs 62396.6 crore due to COVID-19 pandemic disruption in the quarter.

Within business segments, revenue from Petroleum Products (contributes 95.0 per cent) declined 41.6 per cent, Petrochemicals (contributes 3.7 per cent) was down by and revenue from other business activities like Gas, Oil & Gas Exploration Activities, Explosives & Cryogenic Business and Wind Mill & Solar Power Generation declined 41 per cent in Q1FY21 on YoY basis.

IOCL’s Average Gross Refining Margin (GRM) in Q1FY21 stood at US$ (1.98 per bbl) vs. US$ 4.69 per bbl in Q1FY20. The core GRM or the current price GRM after offsetting inventory loss/ gain stood to $ 4.27 per bbl in Q1FY21 up 23% YoY. Company accounted for NIL Budgetary Support in Q1FY21 vs. Rs 655.92 crore accounted in Q1FY20 as revenue grants on sale of SKO (PDS). Refineries were running at an utlisation of 40% in April which improved to 78% by end-May and have peaked to 97% in June. Capacity utilization for Q1 stood at 74.4%. Refining throughput remained muted at 12.9MMT (down 25% YoY). Management expects 90-95% capacity utilization for Q2FY21. On the other hand, marketing margin stood at Rs6.8/ltr v/s Rs 3.4/ltr in Q4FY20 while sales volume for the quarter declined by 28.3% YoY to 15.4MMT.

IOCL expects the IOCL Group's capacity utilisation to be maintained at 70-75 per cent for FY21. IOCL Board approved setting up of Rs 13,800 crore Purified Terephthalic Acid (PTA) plant in Paradip.

Recent Triggers IOCL plans to invest Rs 2 lakh crore in the next 5-7 years to expand its refining, marketing, petrochemicals and natural gas business. Company is expanding almost all its refineries from Panipat to Paradip and also clubbing petrochemicals in all the refineries. Company is making necessary investments in pipeline and marketing infrastructure so that there will be no shortage in meeting the growing energy demands of the country. IOCL accounts for about one-third of India’s refining capacity of 250 million metric tonnes per annum (mmtpa) with 11 refineries. Any material time or cost overruns in the group projects could lead to an increase in the company’s borrowing levels and moderation of credit metrics. However, the risk is largely mitigated by the company’s proven track record of successfully implementing several large projects.

Indian Oil Corporation Ltd.

Key highlights among the few projects  The capex plans include the ongoing up-gradation of refineries for production of BS-VI compliant fuel, brownfield expansion of refineries, setting up of nearly 6,500 km of pipeline infrastructure, investments in setting up of retail infrastructure, setting up of petrochemical plants etc. IOCL, along with HPCL and BPCL, is building the world’s longest — 2,757-km — LPG pipeline from Kandla in Gujarat to Gorakhpur in Uttar Pradesh.  Company is taking up 17 pipelines at a combined cost of Rs 24,000 crore to expand the network to about 21,500 km in the next three years.  Company plans to invest over Rs 20,000 crore in expansion of its petrochemicals project till 2023-24, after spending Rs 25,000 crore in major petrochemicals projects in the Panipat and Paradip refineries.  IOCL is also planning to set-up a mega refinery under a JV with other two PSU OMCs along with ADNOC and Saudi-Aramco on the west coast of India for nearly $60 billion (IOC’s share of $15 billion). IOCL will invest Rs. 17,825 crore to implement Petrochemical and Lube Integration at its Gujarat Refinery. IOC is expanding its petrochemicals capacity by more than 70% from its present 3.2 million tons a year. The integration of Polypropylene and Lube Oil Base Stock (LOBS) units will enhance the petrochemical and specialty products integration index of Gujarat Refinery.  IOCL is investing Rs 14,800 crore in expanding the capacity of its Barauni refinery in Bihar as part of over 2,800 projects being executed under the Aatmanirbhar Bharat campaign to boost domestic manufacturing and create jobs.  IOCL plans to invest Rs 10,000 crore in the development of the city gas distribution (CGD) network in the next eight years.

IOCL will invest Rs 26,000 crore as part of its capital expenditure plan in FY21, we expect Company will be able to do that and internal sources will also recover to support that capex. Of the Rs 26,000 crore, IOCL will spend Rs 4000 crore on reﬁning, Rs 4500 crore on pipeline, Rs 6000 crore on marketing, Rs 2300 crore on Petro Chemical and Rs 4800 crore on a few joint venture investments including city gas distribution. In the last fiscal, IOCL's capex was at Rs 28,000 crore. IOCL has sought permission from its board for increasing its borrowing limit to Rs 165,000 crore.

IOCL and Total, a broad energy company with headquarters in Paris, France, are forming a 50-50 joint venture (JV) company that will manufacture and market high-quality bitumen derivatives and specialty products for the growing road-building industry in India. Total is the leading bitumen manufacturer and supplier in Europe, while Indian Oil is the largest player in the Indian bitumen market. The JV will set up manufacturing units across the country with cost-effective logistics solutions, keeping innovation, safety and sustainability at the helm of its operations. The JV will also explore possibilities to cater to other South Asian markets. 5

Indian Oil Corporation Ltd.

Refinery utilisation stood at ~80% from April to Aug 2020 vs. +100% historically and GRMs is likely to recovers to positive territory India’s Q1FY21 refinery utilisation was at ~74%, well below the pre-Covid utilisation of +100%, given the sharp 22.5% YoY contraction in domestic oil demand in Q1FY21. IOCL's refineries operated at more than 90 per cent capacity in June and July 2020, while most of the facilities for petrochemicals are also operating at 100% utilisation as on date. However, refinery utilization in August was down to 68 per cent, impacted by operation shut down at Paradip Refinery, it was closed for 22 days for maintenance from 25th July to 15th August 2020. We expect, Company could reach its utilisation at 95-100 per cent in near to medium term.

Throughput ('000 tn) Capacity Apr-20 May-20 Jun-20 Jul-20 Aug-20 IOCL-BARAUNI,BIHAR 6000 247 337 512 437 318 IOCL-KOYALI, GUJARAT 13700 578 769 1041 1092 834 IOCL-HALDIA, WEST BENGAL 8000 305 319 533 580 562 IOCL-MATHURA, UTTAR PRADESH 8000 506 730 769 754 641 IOCL-PANIPAT, HARYANA 15000 457 919 1173 1115 977 IOCL-GUWAHATI,ASSAM 1000 0 24 64 87 89 IOCL-DIGBOI,ASSAM 650 54 56 61 51 56 IOCL-BONGAIGAON,ASSAM 2350 174 196 193 222 206 IOCL-PARADIP,ODISHA 15000 725 959 1227 1025 266 IOCL TOTAL 69700 3046 4311 5573 5363 3950

Refinery Utilisation (%) Apr-20 May-20 Jun-20 Jul-20 Aug-20 YTD IOCL-BARAUNI,BIHAR 49.4 67.4 102.4 87.4 63.6 74.0 IOCL-KOYALI, GUJARAT 50.6 67.4 91.2 95.6 73.1 75.6 IOCL-HALDIA, WEST BENGAL 45.8 47.9 80.0 87.0 84.3 69.0 IOCL-MATHURA, UTTAR PRADESH 75.9 109.5 115.4 113.1 96.2 102.0 IOCL-PANIPAT, HARYANA 36.6 73.5 93.8 89.2 78.2 74.3 IOCL-GUWAHATI,ASSAM 0.0 28.8 76.8 104.4 106.8 63.4 IOCL-DIGBOI,ASSAM 99.7 103.4 112.6 94.2 103.4 102.6 IOCL-BONGAIGAON,ASSAM 88.9 100.1 98.6 113.4 105.2 101.3 IOCL-PARADIP,ODISHA 58.0 76.7 98.2 82.0 21.3 67.2 IOCL TOTAL 52.4 74.2 95.9 92.3 68.0 76.6 (Source: PPAC, HDFC sec) 6

Indian Oil Corporation Ltd.

Singapore Gross Refining margin (GRM) recovered to US$0.1/bbl in Aug’20 after falling to a record low of -US$1.5/bbl in May ‘20. Gasoline & Fuel Oil cracks improved to US$0.6/-4.8/bbl in Aug’20. A US$1/bbl change in GRMs leads to almost 20% change in EPS. IOCL marketing margin remained healthy at Rs 8.6/liter (+68% YoY, -9% QoQ) in Q1FY21. This was despite vulnerabilities in terms of rapid increase in international crude prices from trough, no domestic retail price hikes for ~80 days in the quarter, and increase in VAT by some states, which resulted in retail prices touching all-time highs.

Long term Triggers Established player in oil and gas industry in India with continued support from the government IOCL is an established player in Indian oil refining and marketing business with 11 refineries, refining capacity of 80.2 MMT which accounted for 32% of India's refining capacity as on March 31, 2020, and held about 43% share in India's petroleum products market in FY20. The large, integrated operations, geographically diversified refining capacities, and high utilisation rates enhance the operational efficiency. The market position is underpinned by IOCL's entrenched marketing and distribution infrastructure, with 29,085 retail outlets, 12,450 LPG distributors and an unparalleled cross-country pipeline network of 14,670Km throughput capacity of 94.42 MMTPA for crude oil and refined products and 21.69 MMSCMD for gas. Along with these capabilities, its aggressive branding and marketing initiatives should help IOCL maintain its dominant share in the domestic petroleum market.

GoI has supported OMCs through budgetary subsidies and discounts from upstream companies, minimising their sales-related under- recovery burden. Under-recoveries of OMCs have declined significantly, post de-regulation of diesel prices, and aided by favourable crude prices in the past, and reduced consumption of subsidised LPG. IOC has received tangible support from the state in the form of subsidies to meet the under-recoveries on products sold below market prices. It has also received indirect government support for its upstream acquisitions outside the country. GoI will continue to support IOCL by absorbing a large portion of its sales-related under-recoveries, if it occurs.

Refineries based on diversified location, integration in marketing, pipelines, and petrochemicals segments reducing cyclicality IOCL owns and operates nine refineries spread across the country besides having a majority stake in Chennai Petroleum Corporation Ltd (CPCL), which provides it control over an additional two refineries, taking the aggregate to eleven. Seven out of its nine refineries are located in inland areas. The most recently set up refinery at Paradip, being situated at the coast, has improved IOCL’s diversification from the perspective of land-locked vis-à-vis coastal presence. 7

Indian Oil Corporation Ltd.

The forward integration of IOCL into petrochemical segment provides operational synergies, like conversion of surplus products in the country such as naphtha, into higher value petrochemicals (like HDPE, PP etc), which also lead to higher margins. Overall, significant integration across segments reduces the risks related to refining operations.

IOC’s large marketing operations generate largely stable profits, although subject to risks related to regulatory developments and inventory gains/losses to some extent. Further, a large pipeline infrastructure owned by IOCL also results in stable cash generation.

Sound financial profile, dented to some extent in FY20  IOCL, on a consolidated basis, reported Total Operating Income (TOI) of Rs. 484362.3 crore as against Rs. 528148.9 crore in FY19, EBITDA margin deteriorated from 6.7 per cent in FY19 to 1.1 per cent in FY20 and Company reported net loss of 4566.6 crore in FY20 vs. a net profit of Rs 17384.21 crore in FY19.  IOC's net leverage, measured by total net debt/operating EBITDA stood at 5.4x in FY20 vs.2.3x in FY19, due to weak refining margins.  IOC's strong liquidity is reflected in its large holding of cash and equivalents of around Rs 10,600 crore in FY20. Long-term debt maturities in FY21 are only Rs 2100 crore.  We expect IOC to report negative free cash flow in the next few years, but we believe it can secure adequate funding as and when needed, due to its ready access to domestic and international capital and banking markets, and strong linkages with the sovereign and its importance in maintaining India's energy security.  IOCL return ratios could rise sharply over next two years.

Indian Oil Corporation Ltd.

Return Ratio (%) Debt/Equity (x)

What could go wrong?  The unprecedented event of COVID-19 has affected the company’s operations and is likely to impact the overall business in the near term. If the Covid-19 disruption lasts longer than anticipated, the growth of the company will get further disrupted.  IOCL’s core business of refining and marketing of petroleum products is an inherently low margin business. Any extreme vagaries like economic slowdown, volatility in oil and gas prices and regulatory changes in Oil and Gas industry could impact its growth story in near future. The changing macro-economic scenario can have an impact on the growth plans of the Company.  The oil prices and crack spreads are a function of many dynamic factors and fundamental factors such as global demand supply dynamics, geo-political stability in countries with oil reserves, OPEC policies, exchange rates, etc. These factors have translated in high level of volatility in oil prices. Thus, Company’s profitability is exposed to volatility of crude prices and crack spreads as well as foreign exchange fluctuations.  Significant increase in sales-related under-recoveries on account of adverse movement in crude oil prices and foreign exchange rates, with inadequate pass-through in retail price or compensation from GoI.  Currently, PSU refiners make much lower refining margins than private companies as they are obligated to produce petroleum products for the need of the country; despite it not being remunerative.

Indian Oil Corporation Ltd.

 Company’s profitability is also exposed to the forex rates (INR-US$) given the business is largely depends on the volatility of INR against the US$ on sales, crude procurement and foreign currency loans.  Huge new petrochem capacity additions coming from China and the US are likely to keep margins under pressure. However, improving demand for PE and PP across the essential sector should provide some support to demand, and consequently, to margins.  Debt levels of IOCL has risen off late due to capex and working capital requirements.  In the medium term, supply overhang could limit GRM levels; rise of refinery additions is expected to start in China/Middle East. However, prolonged weakness in GRMs do seem unlikely as high cost refineries likely to close down.  A fragmented and majority landlocked refining capacity footprint leads to capital inefficiencies and high operating costs. The sharp market share loss (330bps market share in gasoline and 590bps market share in diesel over FY15-20) weakens earnings growth visibility.  Greenfield high complexity coastal refinery built at a capex of Rs.35000 cr has taken much longer to ramp up heavy crude use and has reported lower GRMs. With Light-Heavy crude spread at parity and crude cost benefit absent, the refinery remains a drag on IOCL's return ratios.

Company Profile: IOCL is India's one of the leading PSU companies and has Maharatna status. Company is engaged in refining, pipeline transportation & marketing, to exploration & production of crude oil & gas, petrochemicals, gas marketing, alternative energy sources and globalisation of downstream operations. The company and its subsidiaries have a total refining capacity of 80.7 MMTPA, which is 32.5% (as on March 31, 2020) of the total domestic refining capacity and sells over 85mtpa (50% share) of Oil products. Company also has global aspirations, fulfilled to an extent by the formation of subsidiaries in Sri Lanka, Mauritius, the UAE, Sweden, USA and The Netherlands. The company has interests across the gas value chain as well, from LNG import terminals to city gas distribution networks (CGD). The company currently operates CGD networks in Agra and Lucknow through Green gas Limited (joint venture with GAIL (India) Limited); besides, the company is also implementing CGD projects in Chandigarh, Allahabad, Panipat, Daman, Ernakulam, Udhamsingh Nagar, and Dharwad through Indian Oil- Adani Gas Private Ltd - a JV with the Adani group. It is pursuing diverse business interests with the setting up of over 15 joint ventures with reputed business partners from India and abroad to explore global opportunities. It also has pipelines (both crude and product), of over 94mmtpa, and petrochemical capacity of over 3mmtpa. Further, IOCL has 52% stake in listed subsidiary CPCL.

Indian Oil Corporation Ltd.

Refineries wise GRM (US$/bbl) Distillate yield (Distillate % on crude)

** GRM of North East refineries are including excise duty benefit.

Net Refining Margin-US$/bbl Domestic direct sales refined pdts (MMT)

Indian Oil Corporation Ltd.

Pipeline

(Source: Company, HDFC sec) Peer Comparison (Figures on TTM basis) Company CMP Rs. Mar Cap Rs.Cr. EPS 12M Rs. Div Yld % ROE % Debt / Eq P/E P/BV EV/EBITDA Reliance Inds 2176.2 1434291.6 64.7 0.3 10.3 0.8 34.5 3.0 17.7 B P C L 346.7 75197.2 17.6 4.8 12.6 1.8 14.0 2.0 11.1 I O C L 76.8 72300.7 -2.6 5.5 8.7 1.4 8.9 0.8 11.0 H P C L 175.9 26796.4 26.3 5.5 11.1 1.4 5.3 0.9 8.0 (Source: Company, HDFC sec)

Indian Oil Corporation Ltd.

Stock Valuation based on SOTP Business EBIDTA (Rs bn) Multiple Value (Rs bn) Value (Rs/sh)* Valuation basis Standalone Refining 32.0 4.0 127.9 14 EV/EBIDTA on Mar 22E Marketing 104.8 4.0 419.2 46 EV/EBIDTA on Mar 22E Pipeline 61.7 5.0 308.3 34 EV/EBIDTA on Mar 22E Petchem 44.1 4.5 198.2 22 EV/EBIDTA on Mar 22E Standalone net Debt (733.9) (80) As on Mar 22E Standalone Equity Value 319.7 35 Investments Traded investments 108.5 12 25% disc. to CMP Non traded investments 136.1 15 Investments at 25% disc. to BV Investments Equity Value 27 CWIP 125.16 13.63 Value per share 75

Fair Value Based on Business Multiple Fair Value Base Case Fair Value Bull Case Fair Value Add on Dips Refining EV/EBITDA 4.0 5.0 5.0 4.0 Marketing EV/EBITDA 4.0 4.5 5.0 4.0 Pipeline EV/EBITDA 5.0 5.0 5.0 4.5 Petchem EV/EBITDA 4.5 5.0 5.0 4.0 Value 75 87 92 69 (Source: Company, HDFC sec)

Indian Oil Corporation Ltd.

Financials (Consolidated) Income Statement Balance Sheet (Rs Cr) FY18 FY19 FY20 FY21E FY22E As at March FY18 FY19 FY20 FY21E FY22E Net Revenues 421491.8 528148.9 484362.3 330505.1 375614.7 SOURCE OF FUNDS Growth (%) 18.6 25.3 -8.3 -31.8 13.6 Share Capital 9478.7 9181.0 9181.0 9181.0 9181.0 Operating Expenses 379852.0 492922.0 478836.6 312193.1 350336.3 Reserves 104395.1 103288.2 86216.9 90066.1 96558.9 EBITDA 41639.8 35226.9 5525.6 18312.0 25278.4 Shareholders' Funds 113873.8 112469.2 95397.9 99247.1 105740.0 Growth (%) 22.3 -15.4 -84.3 231.4 38.0 Long Term Debt 23060.5 39152.5 56070.6 39403.3 37479.7 EBITDA Margin (%) 9.9 6.7 1.1 5.5 6.7 Net Deferred Taxes 12367.9 16509.7 11439.3 12023.0 12622.2 Depreciation 7663.5 8506.5 10274.5 9452.7 9749.5 Long Term Provisions & Others 4354.8 4427.5 4434.9 4738.9 5161.3 EBIT 33976.3 26720.4 -4748.9 8859.2 15528.8 Minority Interest 2151.2 1877.4 876.3 920.1 966.1 Other Income 3419.9 2714.3 2784.6 4069.1 4199.0 Total Source of Funds 155808.2 174436.2 168219.0 156332.5 161969.2 Interest expenses 3844.8 4888.0 6578.7 7144.3 6761.7 APPLICATION OF FUNDS PBT 33551.4 24546.7 -8543.1 5784.0 12966.1 Net Block & Goodwill 124052.0 132492.7 147021.1 144250.0 149627.5 Tax 11823.9 8653.1 -5300.7 1511.2 3267.5 CWIP 19131.4 28281.8 32845.9 35814.3 38962.6 RPAT 21727.5 15893.7 -3242.4 4272.9 9698.6 Other Non-Current Assets 46814.5 44604.6 39245.4 40019.5 40822.0 APAT 22209.7 17384.2 -4566.6 5583.6 10976.1 Total Non Current Assets 189997.8 205379.1 219112.4 220083.7 229412.2 Growth (%) 11.5 -21.7 -126.3 -222.3 96.6 Current Investments 0.0 0.0 0.0 0.0 0.0 EPS 24.2 18.9 -5.0 6.3 12.0 Inventories 70567.9 77126.5 67010.8 52732.2 59884.2 Trade Receivables 10696.5 15797.7 13259.5 9070.5 10305.9 Cash & Equivalents 15717.0 27370.3 19767.0 18417.8 13851.8 Other Current Assets 8693.1 9481.6 10587.2 10196.5 11058.0 Total Current Assets 105674.5 129776.0 110624.4 90417.0 95099.9 Short-Term Borrowings 39080.5 53559.3 69897.4 67897.4 69897.4 Trade Payables 36766.7 41194.1 27603.5 23991.9 26983.1 Other Current Liab & Provisions 64016.9 65965.5 64016.9 62279.0 65662.2 Total Current Liabilities 139864.1 160718.9 161517.8 154168.3 162542.8 Net Current Assets -34189.6 -30942.9 -50893.4 -63751.2 -67442.9 Total Application of Funds 155808.2 174436.2 168219.0 156332.5 161969.3

Indian Oil Corporation Ltd.

Cash Flow Statement Key Ratios (Rs Cr) FY18 FY19 FY20 FY21E FY22E (Rs Cr) FY18 FY19 FY20 FY21E FY22E Reported PBT 33,551.4 24,546.7 -8,543.1 5,784.0 12,966.1 EBITDA Margin 9.9 6.7 1.1 5.5 6.7 Non-operating & EO items -2,937.7 -1,223.8 -4,108.7 -2,758.4 -2,921.5 EBIT Margin 8.1 5.1 -1.0 2.7 4.1 Interest Expenses 3,844.8 4,888.0 6,578.7 7,144.3 6,761.7 APAT Margin 5.0 2.7 -1.2 0.9 2.2 Depreciation 7,663.5 8,506.5 10,274.5 9,452.7 9,749.5 RoE 20.6 15.4 -4.4 5.7 10.7 Working Capital Change -7,161.0 -16,937.0 4,718.0 14,467.1 2,553.1 RoCE 22.9 18.2 0.7 11.2 15.6 Tax Paid -6,344.7 -4,511.2 230.3 -927.4 -2,668.3 Solvency Ratio OPERATING CASH FLOW ( a ) 28,616.3 15,269.2 9,149.7 33,162.3 26,440.7 Net Debt/EBITDA (x) 1.5 2.6 22.8 5.9 4.2 Capex -18,110.7 -26,097.6 -29,367.0 -9,650.0 -18,275.4 Net D/E 0.5 0.8 1.3 1.1 1.0 Free Cash Flow 10,505.6 -10,828.4 -20,217.3 23,512.3 8,165.3 PER SHARE DATA Investments -389.4 1,096.5 8,231.1 -274.1 -279.6 EPS 24.2 18.9 -5.0 6.3 12.0 Non-operating income 1,502.3 3,827.7 -87.3 3,569.2 3,676.0 CEPS 32.5 28.2 6.2 16.6 22.6 INVESTING CASH FLOW ( b ) -16,997.8 -21,173.4 -21,223.3 -6,355.0 -14,879.0 Dividend 13.6 10.9 5.0 2.1 4.9 Debt Issuance / (Repaid) 3,311.0 30,570.7 33,256.3 -18,667.3 76.4 BVPS 124.0 122.5 103.9 108.1 115.2 Interest Expenses -3,844.8 -4,888.0 -6,578.7 -7,144.3 -6,761.7 Turnover Ratios (days) FCFE 9,971.8 14,854.4 6,460.3 -2,299.2 1,479.9 Debtor days 9.3 10.9 10.0 10.0 10.0 Share Capital Issuance 4,739.4 -297.7 0.0 0.0 0.0 Inventory days 61.1 53.3 50.5 58.2 58.2 Dividend -12,471.3 -10,031.3 -4,609.0 -1,950.0 -4,483.2 Creditors days 31.8 28.5 20.8 26.5 26.2 Others -2,538.8 -8,661.1 -8,889.4 640.1 458.6 VALUATION FINANCING CASH FLOW ( c ) -10,804.5 6,692.7 13,179.2 -27,121.4 -10,709.9 P/E 3.2 4.1 -15.5 12.2 6.4 NET CASH FLOW (a+b+c) 813.9 788.5 1,105.6 -314.0 851.8 P/BV 0.6 0.6 0.7 0.7 0.7 Cash & Equivalents 8,693.1 9,481.6 10,587.2 10,273.2 11,125.0 EV/EBITDA 3.0 4.4 33.6 9.2 6.6 EV / Revenues 0.3 0.3 0.4 0.5 0.4 Dividend Yield (%) 17.7 14.2 6.5 2.8 6.4 (Source: Company, HDFC sec)

Indian Oil Corporation Ltd.

One Year Stock Price Chart

(Source: Company, HDFC sec)

Indian Oil Corporation Ltd.

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