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Narasimhan's review
Investment Sector: IPO / Secondary Offering Submitted by Narasimhan 
, Owner
at Krish Systems
5 months ago Tags: Public Sector Oil Company Crude oil price hike Add Tag |
Ind
Indian Oil Corporation (IOC) is a state run company formed in the year 1964 as a result of merger of Indian Oil Company and Indian Refineries Ltd. IOC holds three wholly owned subsidiaries. They are Indian Oil Technologies Ltd. Indian oil Mauritius ltd, IOC Middle East FZE, Dubai. The company also holds 51.88% stake in Chennai Petroleum Corporation Ltd and also 75.11% in Lanka IOC Ltd. The company is operating refineries 10 top refineries of the country, with a combined refining capacity of 60.2 million metric tons per year. IOC is the 21st largest petroleum company in the world. The company offers Services in various areas like Refineries , Petrochemicals, Gas, R&D etc., The company produces a wide range of petroleum products including LPG, Auto LPG, naphtha, bitumen, paraffin, kerosene, Lubricants, Greases, Aviation Turbine Fuel etc., The company has now started to supply Liquefied Natural Gas (LNG). The company has been ranked 135th position in the Fortune Global 500 companies. It was also ranked as the 20th largest petroleum company in the world. IOC was awarded National award for “Innovations in Implementing Business Continuity for SAP R/3 Environment” by the Indian government.
The company recently announced its last quarter results. The company has posted a net loss of Rs.4142.7 million for the quarter ended March 31, 2008 as against net profit of Rs.15824 million for the same period of last year. Total sales of the company went up 40.71% to Rs.706647.10 million when compared with the sales for the same period last year.
The financial results of the company are tabulated below.
| Rs Millions | Mar ' 08 | Dec ' 07 | Sep ' 07 | Jun ' 07 | Mar ' 07 |
| Sales | 706647.1 | 702131.9 | 610296.2 | 585765.1 | 502187.1 |
| Operating profit | -69142.5 | 29674.8 | 51212.6 | 14186.5 | 8020.3 |
| Interest | 4923.4 | 3879.6 | 3335.3 | 3374.1 | 4260.5 |
| Gross profit | 226.4 | 39258.3 | 60575.2 | 27722.9 | 55693.4 |
| Depreciation | 6921.6 | 6662.9 | 6764.7 | 6747.8 | 7168.8 |
| Net profit / loss | -4142.7 | 20906.9 | 38177.5 | 14650.7 | 15824 |
| Equity capital | 11923.7 | 11923.7 | 11923.7 | 11923.7 | 11680.1 |
| EPS (Rs) | -3.47 | 17.53 | 32.02 | 12.29 | 13.55 |
| OPM (%) | -9.78% | 4.23% | 8.39% | 2.42% | 1.60% |
| GPM (%) | 0.03% | 5.59% | 9.93% | 4.73% | 11.09% |
| NPM (%) | -0.59% | 2.98% | 6.26% | 2.50% | 3.15% |
The comparative performance with major peers is given below.
| Rs Millions | IOC | Essar Oil | MRPL | BPCL | HPCL |
| Sales Turnover | 643635.9 | 474.6 | 94651.3 | 289284 | 314706.1 |
| Other Income | 74292.3 | 16.1 | 88.5 | 1904 | 3176.6 |
| Total Income | 717928.2 | 490.7 | 94739.8 | 291188 | 317882.7 |
| Total Expenses | 712778.4 | 573.5 | 90345.2 | 284913 | 312537.7 |
| Operating Profit | -69142.5 | -98.9 | 4306.1 | 4371 | 2168.4 |
| Gross Profit | 5149.8 | -82.8 | 4394.6 | 6275 | 5345 |
| Interest | 4923.4 | 19.9 | 358.4 | 0 | 3009.1 |
| PBDT | 226.4 | -102.7 | 4036.2 | 5934 | 2335.9 |
| Depreciation | 6921.6 | 7.2 | 946.4 | 3065 | 2532.1 |
| PBT | -6695.2 | -109.9 | 3089.8 | 2869 | -196.2 |
| Tax | -2552.5 | -25.1 | -353.1 | 0 | 44.8 |
| Net Profit | -4142.7 | -84.8 | 3442.9 | 2913 | -241 |
| Equity | 11923.7 | 11737.6 | 17526.4 | 3615 | 3390.1 |
| OPM | -10.74% | -20.84% | 4.55% | 1.51% | 0.69% |
| NPM | -0.58% | -17.28% | 3.63% | 1.00% | -0.08% |
IOC despite its net loss tops in the total sales turnover. IOC reported the lowest net profit growth in the last nine quarters. Except MRPL and BPCL all other major oil companies posted negative results. It is obvious that the fact behind these red figures is the rise in the crude oil prices. But as the Government of India raised the FDI limit from 26% to 49%, the company may revive from this fall in future.
From the chart above it is clear that the company after reaching Rs.794 in the month of January is on a down track. The stock is now trading between 366-373. The stock is expected to move in a side ways range between 380-450. Both Long term and Near-term investors may buy this stock at current level with a stop at 380.
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