Indian Oil Corporation Limited (IOCL), a Maharatna company, has recently published its financial performance for the first quarter of 2024. This article analyzes key highlights and financial metrics from the report, offering insights into the company’s performance and its strategic financial maneuvers. The analysis covers revenue, expenses, profits, and other significant financial ratios, providing a comprehensive overview for stakeholders and potential investors.
Key Highlights
- Revenue and Income:
- Total Revenue: IOCL reported a total revenue of ₹2,16,522.66 crores for Q1 2024, compared to ₹2,21,833.89 crores in Q1 2023.
- Other Income: The company earned an additional ₹533.90 crores from other income streams.
- Expenses:
- Cost of Materials Consumed: ₹1,04,355.32 crores, reflecting an increase from the previous quarter.
- Excise Duty: ₹22,753.24 crores.
- Purchases of Stock-in-Trade: ₹64,728.67 crores.
- Employee Benefits Expense: ₹2,699.51 crores.
- Profitability:
- Net Profit: IOCL’s net profit for the quarter stood at ₹2,643.18 crores.
- Earnings Per Share (EPS): The basic and diluted EPS for the quarter were ₹1.92 each.
Detailed Financial Analysis
Revenue Breakdown
IOCL’s total revenue from operations for Q1 2024 was ₹2,15,988.76 crores. The breakdown of revenue by segment is as follows:
- Petroleum Products: ₹2,03,339.01 crores.
- Petrochemicals: ₹6,789.42 crores.
- Other Business Activities: ₹10,690.78 crores.
The company’s strategic focus on diversifying its revenue streams is evident from the significant contributions of its petrochemical and other business activities segments.
Expense Analysis
The major components of IOCL’s expenses for Q1 2024 include:
- Cost of Materials Consumed: ₹1,04,355.32 crores.
- Excise Duty: ₹22,753.24 crores.
- Purchases of Stock-in-Trade: ₹64,728.67 crores.
- Employee Benefits Expense: ₹2,699.51 crores.
- Finance Costs: ₹1,960.27 crores.
- Depreciation, Amortization, and Impairment Expense: ₹3,755.65 crores.
The overall expense structure highlights the substantial cost involved in material consumption and stock purchases, reflecting the operational scale of the company.
Profit Analysis
The company’s profit before tax for the quarter was ₹3,452.71 crores, with a net profit of ₹2,643.18 crores after accounting for taxes. The comparison of net profit across different quarters indicates a steady performance despite fluctuating market conditions.
Financial Ratios
Key financial ratios for Q1 2024 are as follows:
- Debt Equity Ratio: 0.64
- Current Ratio: 0.69
- Interest Service Coverage Ratio: 4.30
- Operating Margin: 2.26%
- Net Profit Margin: 1.22%
These ratios provide insights into the company’s financial health, liquidity, and profitability. The debt equity ratio indicates a balanced capital structure, while the interest service coverage ratio demonstrates the company’s ability to meet its interest obligations.
Dividend Announcement
In the Board Meeting held on July 30, 2024, IOCL declared its dividend for the first quarter. Here are the details:
- Dividend Per Share: ₹3.50
- Record Date: August 15, 2024
- Payment Date: August 30, 2024
This dividend declaration, amidst a quarter of declining profits, highlights IOCL’s commitment to rewarding its shareholders.
Dividend Yield and Payout Ratio
To gauge the attractiveness of this dividend, let’s look at two key metrics:
- Dividend Yield: Assuming IOCL’s current share price is ₹100, the dividend yield would be 3.5%.
- Dividend Payout Ratio: With an EPS of ₹1.92 and a quarterly dividend of ₹3.50, the payout ratio stands at approximately 182%. This high payout ratio indicates that IOCL is returning a significant portion of its profits to shareholders.
Strategic Initiatives and Future Outlook
IOCL has undertaken several strategic initiatives to enhance its operational efficiency and market presence. The company’s focus on refining margins, cost management, and expanding its petrochemical and renewable energy portfolio is expected to drive future growth.
The market dynamics and regulatory environment will continue to influence IOCL’s performance. However, the company’s robust financial foundation and strategic initiatives position it well to navigate challenges and capitalize on opportunities.
Conclusion
Indian Oil Corporation Limited’s Q1 2024 financial performance reflects its resilience and strategic acumen in a dynamic market environment. The detailed analysis of revenue, expenses, and profitability provides a clear picture of the company’s current financial health and future potential. Stakeholders and investors can derive significant insights from this analysis to make informed decisions.
