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Informist, Saturday, May 16, 2026

By Sunil Raghu

AHMEDABAD – Indian Oil Corp. Ltd. is expected to report a fall in its net profit for the March quarter, breaking its four-quarter streak of an on-year rise. The decline is expected to be on account of weaker fuel marketing margins and higher LPG under-recoveries, which is expected to be partly offset by strong refining performance.

The fall in profit is expected despite a rise in the revenue during the quarter. The revenue for the quarter is likely to be higher on rising crude prices and inventory gains amid supply disruptions triggered by war in the West Asia since end of February.

Indian Oil's consolidated net profit for the March quarter is expected to fall over 4% on year to over INR 69 billion, according to the average of estimates from 10 brokerages. The revenue is estimated at INR 2.46 trillion, up near 26% from the year-ago quarter. The net profit is expected to fall near 43% and revenue rise a little over 20% from the trailing quarter.

Estimates for Indian Oil Corp.'s net profit for the March quarter vary widely, reflecting divergence in assumptions on marketing losses and inventory gains. J.M. Financial Institutional Securities has the highest estimate at over INR 129 billion, factoring in robust earnings before interest, tax, depreciation and amortisation led by strong crude inventory gains and core gross refining margins. ICICI Securities has the lowest estimate at about INR 14 billion, as it expects significant retail fuel losses and a sharp rise in liquefied petroleum gas, or LPG, under-recoveries.

The brokerage estimates LPG losses at over INR 300 per cylinder in March and around INR 190 per cylinder for the March quarter. Publicly available data shows that LPG losses for oil marketing companies stood at around INR 45-INR 50 per cylinder in March 2025.

Revenue estimates range from over INR 3.0 trillion by Equirus Securities, which expects strong inventory gains and elevated refining margins to support the top line to about INR 1.90 trillion by Nuvama Wealth Management, which factors in lower refinery runs due to logistics disruptions linked to tensions in the Strait of Hormuz and weaker marketing margins.

Indian Oil, with a refining capacity of nearly 81 million tonnes per annum and a fuel retail network of more than 40,000 outlets, is expected to see its refining segment drive performance in the quarter. 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. This benchmark GRM rose sharply to an average of around $14 per barrel during the March quarter, up from nearly $8 per barrel a year ago. The brokerages estimate Indian Oil's GRM at around $18-$19 per barrel, with core GRM of around $11 per barrel and remaining in inventory gain.

MARKETING MARGIN

The benefit Indian Oil would get from refining in the March quarter is likely to be offset by weaker marketing margins. A 28% year-on-year rise in crude prices during the quarter, with the cost of Indian crude basket touching a high of nearly $156 per barrel, along with depreciation of the rupee and stable retail fuel prices, compressed auto fuel margins significantly. As per publicly available information, crude oil prices in the March quarter in 2024 averaged around $74 per barrel, while they were mostly in the $64-per-barrel range in the March quarter of 2025. Despite a 3% rise in refining throughput during the March quarter, analysts' estimates suggest petrol margins for Indian Oil could fall by over 90% to less than INR 1 per litre in the March quarter. Same factors also saw diesel record negative margins of nearly INR 12 per litre, compared with over INR 6 per litre of gain a year ago.

Indian Oil serves over 155 million liquefied petroleum gas customers. The state-owned oil marketing companies, including Indian Oil, supply liquefied petroleum gas, or 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-recovery. For the March quarter, Indian Oil's LPG under-recoveries rose sharply due to a spurt in global prices, though government compensation for such losses would provide partial support to earnings. 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 over INR 143 billion, down sequentially on weaker marketing performance. The EBITDA estimates range from INR 68 billion by ICICI Securities Ltd. to INR 220 billion by J.M. Financial Institutional Securities Pvt. Ltd., with higher estimates factoring in stronger refining margins and inventory gains. "We expect Indian Oil's EBITDA to fall by 25% YoY as weak marketing margins (due to tension in West Asia) are offset by improvement in refining margins (+1.3x YoY) and lower underrecoveries on LPG sales due to rise in cylinder prices (+8% YoY) and lower propane prices (-17% YoY); petchem is likely to remain weak on muted realization and spreads YoY," Nuvama Wealth Management Ltd. said in its report.

Friday, shares of Indian Oil Corp. closed over 4% lower at INR 138.48 on the National Stock Exchange. The stock has fallen over 21% from INR 175.77 since Feb. 5, the day the company reported its results for the December quarter. The company will report its March quarter earnings on Monday.

Of the 11 research reports on the company available with Informist, seven have a "buy" recommendation with an average target price of INR 199 per share. This is nearly 40% higher than the current market price. Two brokerages have a "hold" recommendation while two have a "sell" call on the stock at an average target price of INR 161.

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

End

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

Edited by Akul Nishant Akhoury

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