Indian Oil Corporation (IOC) stock closed lower today after the refiner reported loss in the March quarter hurt by a surge in inventory losses. The oil marketing company (OMC) reported a net loss of Rs 5,185 crore in Q4 compared with a profit of Rs 6,099 crore in fourth quarter of 2018-19. The company marked Rs 11,304.64 crore as "exceptional item" or one-time loss due to inventory loss which reduced profit in the last quarter.
Inventory loss is booked when oil prices fall by the time a company processes oil into fuel.
The coronavirus-led nationwide lockdown during which demand for fuel fell significantly, is seen as a major factor behind inventory loss for the oil refiner.
Revenue from operations fell to Rs 1.39 lakh crore in Q4 against Rs 1.44 lakh crore in corresponding quarter of 2018-19. Impacted by the decline in Q4 earnings, IOC stock touched an intraday low of Rs 86.05, down 3.69% today.
Later, the stock closed 2.63% lower at Rs 87 against previous close of Rs 89.35 on BSE. The large cap stock has fallen after 4 days of consecutive gain. It stands higher than 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages.
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Market cap of the firm fell to Rs 81,903 crore. Total 25.69 lakh shares changed hands amounting to turnover of Rs 22.82 crore.
Jyoti Roy, DVP Equity Strategist at Angel Broking said, "Indian Oil Corporation (IOCL) reported a 6.2% YoY de-growth in consolidated revenues to Rs 1,18,439 crore for Q4FY20, due to fall in total sales of products (including exports) by 2.2% YoY to 22.2 million metric tonne. EBITDA for the quarter stood at Rs 215 crore against market expectations of an EBITDA loss. During the quarter, the company posted a consolidated loss before tax of Rs 13,610 crore against a profit before tax of Rs 8,634 crore in Q4FY19.
While Q4FY20 numbers have come in ahead of street estimates on revenues and EBITDA front, we believe that the Q1FY21 would be keenly watched by the markets given that demand would be adversely impacted for the better part of the quarter as compared to just about a week in Q4FY20."
The firm also approved the proposal for seeking approval of the shareholders for increase in the borrowing limits from Rs 1,10,000 crore to Rs 1,65,000 crore and for creation of charge on the assets of the company, IOC said during Q4 earnings today.
By Aseem Thapliyal