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Informist, Friday, May 22, 2026

 

AHMEDABAD – S&P Global Ratings expects a prolonged West Asia conflict and high crude oil prices to potentially erode Indian Oil Corp. Ltd.'s financial cushion and liquidity position, seeing the Indian state-run oil marketing major balance its role of meeting the country's energy needs while absorbing losses, the ratings agency said in a press release

 

The agency sees Indian Oil's earnings and cash flow over the next 12 months turning increasingly uncertain, and given the widening gap between the pump prices and crude oil input price, S&P Ratings said it cannot rule out the possibility of a material base-case revision.

 

However, it also stated that Indian Oil's (BBB/Stable/--) rating, basis strong banking relationships and access to funding markets, could mitigate short-term liquidity stress. Indian Oil, the ratings agency stated, has committed and uncommitted working capital lines with banks and a track record of raising funds through commercial paper issuances. In its view, Indian Oil's minority stake in Oil and Natural Gas Corp. Ltd., Oil India Ltd., and Gail (India) Ltd., with a combined market value of more than $3 billion adds to financial flexibility of the company.

 

The ratings agency also believes that the government may step in to help if required. It cited cuts in excise duty and a 3-4% increase in petrol and diesel prices as indicators to this effect.

 

S&P Ratings said that Indian Oil's earnings for FY26 were better than its expectations, with free operating cash flows of INR 400 billion, and S&P Global Ratings adjusted debt of close to INR 1.3 trillion. "Healthy volume growth, higher refining margins, and working capital gains have translated into an EBITDA of more than INR760 billion for the year. Given the strong earnings growth and disciplined spending on the company's expansion, we estimate IOCL's adjusted debt-to-EBITDA ratio to have fallen below 2x in fiscal 2026, versus 2.2x in the previous fiscal year," the ratings agency said.

 

The company's net profit for the March quarter was INR 113.78 billion, up nearly 57% from INR 72.65 billion in the year-ago quarter. The revenue from operations for the quarter rose 7% on year to INR 2.33 trillion. The company's top line, net of excise duty, was INR 2.08 trillion.

 

At 1032 IST, shares of IOC traded at INR 139.01 per share on the National Stock Exhange, up over 1%.  End

 

US$1 = INR 96.13

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

 

Reported by Sunil Raghu

Edited by Avishek Dutta

 

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