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Informist, Monday, Feb. 2, 2026

 

By Sunil Raghu

 

MUMBAI - Indian Oil Corp. Ltd. is expected to see an over fourfold jump on year in net profit for the December quarter, supported by strong refining margin, lower raw material costs, improved product spreads, and stable fuel marketing margin. The growth in net profit is estimated to be among the strongest the country's largest oil marketing company has seen in several quarters. Analysts, however, see Indian Oil's revenue growth muted due to steady fuel prices and stable volumes.

 

Indian Oil's consolidated net profit for the December quarter is expected to rise nearly 320% on year to over INR 92 billion, according to the average of estimates from 10 brokerages. The revenue is estimated at INR 1.94 trillion, up just 0.3% from the year-ago quarter. The net profit is expected to rise over 21% and revenue nearly 9% from the trailing quarter.

 

The estimates for Indian Oil's net profit for the December quarter range widely. Elara Securities (India) Pvt. Ltd. has the highest estimate of INR 131 billion, as it expects no loss to the company from the sale of liquefied petroleum gas during the quarter. Prabhudas Lilladher Pvt. Ltd. has the lowest estimate of INR 71 billion, with expected high-single-digit growth in gross refining margin but a fall in gross marketing margin.

 

The lowest estimate for revenue is INR 1.72 trillion from Nuvama Wealth Management Ltd., based on flat year-on-year throughput, lower retail fuel margin, and depreciation of the rupee. The highest estimate is INR 2.43 trillion by Emkay Global Financial Services Ltd., which expects refining throughput and retail fuel sales to rise on year as well as on quarter.

 

During the December quarter, the oil major is also expected to see an adventitious loss of $2 per barrel in refining and $1 per barrel for marketing, Kotak Institutional Equities said. Adventitious loss refers to an accounting loss owing to a fall in prices of raw material, crude oil in this case, or final products between the time inventory is purchased and sold. This loss may also be one of the key reasons for Indian Oil to report muted year-on-year revenue growth despite expected refinery throughput at nearly 19 million tonnes, which is up 4% on year.

 

Indian Oil, with a refining capacity of nearly 81 million tonnes per annum and a fuel retail network of more than 40,000 outlets, has significant advantages of scale across refining and marketing operations. Beyond scale, the strong earnings performance in the December quarter is expected to be led by the refining segment, supported by a sharp improvement in the benchmark Singapore gross refining margin. The gross refining margin shows a refinery's operational efficiency and is a key profitability metric for refiners. The Singapore gross refining margin serves as the primary benchmark for refineries in Asia and is considered a key indicator for pricing, profitability, and market health for refineries globally.

 

The Singapore gross refining margin for the December quarter averaged $7.5 per barrel, compared to around $5 per barrel a year ago and $3.8 per barrel in the September quarter. Brokerages expect Indian Oil's gross refining margin to be around $9 per barrel for the December quarter, compared with $3.69 per barrel a year ago and $6.32 per barrel in the previous quarter. The expected rise in product cracks, the difference between the price of a barrel of crude oil and that of a refined product, and cheaper crude oil feed will boost the gross refining margin. As per publicly available information, crude oil prices in the December quarter in 2024 averaged around $74 per barrel, while they were mostly in the $64-per-barrel range in the December quarter just gone by.

 

MARKETING MARGIN

While Indian Oil refineries had lower maintenance shutdowns in the December quarter and domestic retail sales were up 4%, the refiner's retail margins may be muted as a weaker rupee could partly cancel out the benefits from cheaper global fuel prices. Motilal Oswal Financial Services Ltd. sees gross marketing margin for Indian Oil at INR 5.8 per litre. Nuvama sees the company's diesel retail margin falling 37% on year to INR 5.5 per litre, with petrol margin likely to fall 17% on year to INR 10.7 per litre.

 

Indian Oil serves over 155 million liquefied petroleum gas customers. The state-owned oil marketing companies, including Indian Oil, supply LPG cylinders to a section of domestic customers at a regulated, below-cost price even when international prices are high. The loss borne by these companies is known as under-recoveries.

 

Indian Oil, in earlier filings and public statements, had said its under-recovery on LPG was INR 170 per cylinder in January 2025. This was reported to have come down to about INR 45-50 per cylinder in December. In August, the government had announced a compensation of INR 300 billion to be paid to oil marketing companies in 2025-26 (Apr-Mar) for their LPG under-recoveries. As per published data, IOC's share of this is nearly INR 145 billion, which is being disbursed in monthly instalments of little over INR 12 billion, beginning November. This is expected to boost the company's revenue and net profit.

 

Indian Oil's earnings before interest, tax, depreciation, and amortisation are expected to average about INR 169 billion, up sharply from the year-ago quarter and higher sequentially. The EBITDA estimates range from INR 137 billion to INR 225 billion, with higher estimates factoring in stronger gross refining margin and stable fuel marketing margin.

 

Monday, shares of Indian Oil Corp. ended over 3% higher at INR 164.61 on the National Stock Exchange. The stock has risen over 6% since Oct. 27, the day the company reported its results for the September quarter. 

 

Of the 10 research reports on the company available with Informist, six have a "buy" recommendation with an average target price of INR 182 per share. This is nearly 11% higher than the current market price. One brokerage has a "hold" recommendation while three have a "sell" call on the stock at an average target price of INR 145.

 

The following are the Oct-Dec earnings estimates for Indian Oil Corp., in INR billion, from 10 brokerages in descending order by estimate of net profit:

 

Brokerage	Net sales	Net profit	EBITDA
Elara Securities (India) Pvt. Ltd.	1,900.98	130.99	225.22
Emkay Global Financial Services Ltd.	2,433.85	110.96	201.46
YES Securities (India) Ltd.	1,826.69	96.99	167.87
Kotak Securities Ltd.	1,917.90	96.20	171.55
Nuvama Wealth Management Ltd.	1,717.92	92.70	170.88
Motilal Oswal Financial Services Ltd.	1,930.60	83.60	158.70
Dolat Capital Market Pvt. Ltd.	1,789.65	83.36	155.81
ICICI Securities Ltd.	1,889.50	78.40	150
J.M.Financial Institutional Securities Pvt. Ltd.	2,288.84	77.21	149.12
Prabhudas Lilladher Pvt. Ltd.	1,749.60	70.80	137.20
Average	1,944.55	92.12	168.78

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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