IOC (Accumulate)
New Delhi   16-Nov-2010

CMP: Rs 398.80
Target: Rs 458

IOCL reported results which were above our estimates at EBIDTA and PAT Level, primarily due to inventory gain and issuance of oil bonds/Cash receivables during the quarter.

EBIDTA at Rs 68.9 billion as against Rs 6.1 billion a year ago is mainly due to Inventory gain and issuance of oil bonds/cash receivables from the government of India.

Average gross refining margin for IH FY11 was at $4.7/bbl as compared to $5.4/bbl (declined by 13 per cent YoY) above our expectation of $3.5/bbl. Valuations look attractive at 1.4x FY12E ABV, mainly due to recent change in reforms.