Analyst Concall
IOC says LPG under-recoveries spiked debt to INR 1.3 tln
This story was originally published at 13:37 IST on 28 January 2025
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--IOC: Investing INR 720 billion to enhance refining capacity to meet demand
--IOC: Converting retail pumps to energy stations to meet e-vehicle needs
--IOC: Focused on investing in alternative energy sources
--IOC: Aim to develop 31 GW of green energy capacity by 2030
--IOC: Working to promote green hydrogen ecosystem in the country
--IOC: Total pipeline network 18,500 km as of Dec 31
--IOC: Russia accounts for 25% of co's total crude oil imports
--IOC: Spent INR 280 bln capex so far on petrochemical ops
--IOC: Planned capex for petrochem ops in FY25 is INR 350 bln
--IOC: No term contracts with Russia for crude oil in FY25
--IOC: Panipat refinery to commence production in December
--IOC: Full scale income from Gujarat refinery to come from FY28
--IOC: Debt stood at INR 1.31 tln as on Dec 31 vs INR 1.16 tln yr ago
--IOC: High Under-recoveries in LPG reason for spike in debt
--IOC: Open to buying green energy capacity to meet 31 GW aim
--IOC: Exploring organic, inorganic options in green energy space
--IOC: Planned capex for FY26 seen at INR 330 bln
--IOC: Buying Russian crude only if it comes at a discount
By Narayana Krishna and Noopur Bhandiwad
HYDERABAD/MUMBAI - Under-recoveries in Indian Oil Corp. Ltd's liquefied petroleum gas business is the primary reason for its consolidated debt rising by INR 150 billion on year to INR 1.31 trillion as on Dec. 31, the company's management said in a post-earnings conference call Tuesday. The public sector oil refining and marketing major added that it is optimistic about keeping its debt at a reasonable level.
The company reported a net profit of INR 28.74 billion for the December quarter, down 64% on year, missing analysts' estimate of INR 55.63 billion. The company's revenue for the quarter fell 2.6% on year to INR 1.94 trillion. The average gross refining margin for Apr-Dec was $3.69 per barrel, down from $13.26 per barrel a year ago.
The management said that the company was open to importing crude oil from Russia in the coming financial year too, but only when it is available at a discounted price. The company said in the first nine months of 2024-25 (Apr-Mar), 25% of its total crude imports were from Russia. Along with other oil refining companies, Indian Oil imports crude oil from Russia primarily because of the significantly discounted prices offered by that country, especially since the Ukraine conflict led many Western nations to shun Russian oil purchases.
The company said there are no term contracts with Russian crude oil suppliers and the procurement is only based on the pricing and discount structure. The management said recent sanctions on select Russian suppliers impacted the overall industry and that the dependency on Russian imports is monitored on a daily basis.
CAPEX PLANS
Indian Oil's management said the planned capital expenditure of INR 720 billion for the next few years is likely to increase its refining capacity and provide enough room for growth. After the completion of the capital expenditure, the total refining capacity of the company will reach 88 million tonnes a year from the current 80.7 million tonnes. The management said the upcoming refinery in Panipat is expected to commence production in December, while the contribution of full-scale revenue from its Gujarat refinery is expected from FY28.
For the petrochemicals business, the company spent INR 280 billion of the planned capex of INR 350 billion for FY25 as on Dec. 31, the management said. The company currently owns 18,500 kilometres of pipeline in the country to transport petroleum products, which accounts for half the total oil and gas pipeline network in the country. The overall capex for FY26 will be INR 330 billion, the company said.
GREEN ENERGY
Indian Oil is actively exploring organic and inorganic growth opportunities in the green energy space, the company's management said. By 2030, the company has set a target of hitting 31 GW capacity in green energy, which includes solar, green hydrogen, and other alternative energy segments. The company said the targeted capacity would be achieved organically and by way of acquisitions and joint ventures. It expects to add at least 5 GW to 6 GW capacity in the coming years.
The company is focused on investing in alternative energy sources and working on developing the green energy ecosystem in the country, the management said. Indian Oil has already initiated plans to convert its nationwide retail network into energy stations by adding charging stations to meet the needs of e-vehicles.
At 1309 IST, shares of Indian Oil Corp were at INR 124.20 on the National Stock Exchange, up 0.1% from the previous close. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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