CLSA has downgraded Indian Oil Corporation (IOC) to an Underperform rating with a revised target price of ₹120, indicating a potential downside of 18% from the current market price of ₹145.74. The Q2 results were below expectations, as weaker marketing margins and larger-than-anticipated inventory losses pushed core profit before tax (PBT) into negative territory. However, a one-time provision writeback provided some relief to the reported profit after tax (PAT).
Following the Q2 miss, CLSA has cut its FY25-27 core PAT estimates for IOC by 6% to 20%, factoring in the weaker performance and the potential for a significant rise in marketing margins. CLSA also flagged the continued weak performance and the potential negative catalysts, including a possible retail fuel price cut or an excise duty hike, as risks to the stock.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are advised to perform their due diligence before making investment decisions
