>INDIAN OIL CORPORATION (MOTILAL OSWAL)

■ 4QFY09 numbers lower than estimated: IOC reported EBITDA of Rs86b (v/s our estimate of Rs127b) for 4QFY09. Reported PAT was Rs66b (v/s our estimate of Rs91b). Quarterly numbers are not comparable as Bongaigaon Refinery (BRPL) has been incorporated in 4QFY09 results.

■ Fully compensated for under-recoveries in FY09: Led by positive margins in petrol and diesel, IOC reported gross over-recovery of Rs11.7b in 4QFY09. It received oil bonds worth Rs62b (v/s our estimate of Rs84b) and upstream discounts of Rs1.5b (v/s our estimate of nil), resulting in net over-recovery of Rs75.4b. For the full year, IOC’s under-recovery of Rs586b was fully compensated by oil bonds of Rs404b and upstream discounts of Rs182b.

■ Reported GRM of US$4.5/bbl: IOC’s reported GRM for 4QFY09 was US$4.5/bbl (v/s our estimate of US$4/bbl) as against US$9.02/bbl in 4QFY08 and negative US$2.1/bbl in 3QFY09. Throughput in 4QFY09 was 14.8mmt, up 20% YoY and 23% QoQ.

■ Maintain Buy: The key issue to watch in the near term would be likely freeing of retail prices (the Petroleum Minister has indicated that the proposal to free retail prices will be submitted to the Cabinet Committee in 6-8 weeks). The stock trades at 11.2x FY10E EPS of Rs54.2 and 1.4x FY10E BV of Rs419. Our target price is under review.

To see full report: IOC