Indian Oil Corporation Ltd (IOC), a Maharatna company controlled by the Government of India, leads the country’s oil refining and petroleum marketing sector and operates across the entire hydrocarbon value chain.
Q2 FY26 Financial Summary
- Revenue grew 2.09% year on year to ₹1,78,628 crore, up from ₹1,74,976 crore, supported by stronger demand and refining.
- Total expenses dropped 5.19% to ₹1,68,880 crore, compared to ₹1,78,120 crore last year, reflecting cost efficiencies and lower crude prices.
- Consolidated net profit came in at ₹8,191 crore, a strong turnaround from a loss of ₹449 crore in the same period last year.
- Earnings per share (EPS) improved sharply to ₹5.54 from -₹0.12 year on year.
Operational and Business Highlights
- Robust profit growth was primarily driven by higher gross refining margins (GRM) as international crude oil prices declined. IOC earned $19.6 per barrel in Q2, compared to $2.15 in Q1 and $1.59 in Q2 last year.
- Average GRM for April–September 2025 rose to $6.32 per barrel from $4.08 a year earlier, with the September-quarter margin at $10.6 per barrel.
- The company processed 17.609 million metric tons (MMT) of crude oil during Q2 FY26, up from 16.738 MMT last year.
- Expenses declined due to operational efficiencies and reduced input costs, enhancing profitability.
- Marketing volumes grew 5% year on year, outpacing the industry average. Capital expenditure of ₹1.8 billion supported expansion and technology upgrades.
Financial Position and Outlook
- Brokerages are generally positive about IOC’s earnings visibility, with Morgan Stanley maintaining an ‘Overweight’ rating and a target price of ₹168 per share.
- JM Financial expects strong earnings growth over FY27–28, led by upcoming refining capacity additions, but expects margins to normalize over time with policy measures.
- IOC continues to benefit from integrated refining-marketing operations and sourcing flexibility, even with lower Russian crude intake.
- The Ministry of Petroleum and Natural Gas has approved compensation for LPG under-recoveries to be recognized from Q3.
IOC’s strong Q2 FY26 results mark a sharp turnaround from losses last year, driven by efficiency gains, margin expansion, and robust operational performance, positioning the company for sustained growth in the coming quarters.
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