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Informist, Friday, Jul 31, 2026

By Sunil Raghu

AHMEDABAD – Indian Oil Corp. Ltd. is expected to report a big loss for the June quarter, as the war in West Asia led to a sharp rise in the cost of crude oil, freight, and insurance. Oil marketing companies in India were unable to pass on these higher costs to retail consumers of fuels for most part of the June quarter and are hence expected to report large losses. As the largest oil retailer, Indian Oil is on track to post the largest loss among these firms. A low refining margin will also add to the company's troubles, according to brokerages tracking the company.

For the June quarter, the country's largest state-owned oil marketing company is expected to post a loss of INR 174 billion, according to the average of estimates from 13 brokerages. The company had recorded a net profit of INR 57 billion for the year-ago quarter and of INR 114 billion for the March quarter. Estimates for Indian Oil Corp.'s bottom line for the June quarter vary widely, reflecting divergence in assumptions on marketing losses and inventory gains. The highest estimate for the loss is INR 320 billion from Emkay Global Financial Services Ltd. and the lowest is INR 32 billion from Nuvama Wealth Management Ltd.

Indian Oil's revenues are estimated at INR 2.44 trillion, up over 26% from INR 1.93 trillion for the year-ago quarter and up 17% from INR 2.08 trillion for the March quarter. The highest estimate for revenues is INR 3.06 trillion from YES Securities (India) Ltd. and the lowest is INR 1.98 trillion from JM Financial Institutional Securities Pvt. Ltd.

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. Some brokerages expect Indian Oil's gross refining margin at $23-$24 per barrel for the June quarter, up sharply from $2.2 per barrel a year ago. India's largest state-owned oil marketing company did not share its gross refining margin for the March quarter or for the financial year 2025-26 (Apr-Mar), and said that refining margins have been volatile and unstable owing to the war in West Asia. The gross refining margin shows a refinery's operational efficiency and is a key profitability metric for refiners.

A majority of brokerages expect Indian Oil's crude refinery throughput at 19.4 million tonnes to 19.5 million tonnes, up over 3-4% on year. Nuvama sees throughput rise 5%, as Indian Oil had shut down a part of its refining capacity in the June quarter for maintenance. With higher refining margin and better throughput, the company is expected to see higher refining income during the June quarter.

MARKETING MARGIN

Whatever little benefit Indian Oil would get from refining in the June quarter is likely to be offset by weaker marketing margins. High crude oil prices, along with a nearly 11% depreciation of the rupee to 94.7 per dollar in the reporting quarter from 85.6 in the year-ago quarter, and unchanged retail fuel prices have compressed auto fuel margins significantly. Crude oil prices in the June quarter averaged $96.7 per barrel, up sharply from $64 per barrel in the June quarter of FY26 and also from around $79.8 per barrel in the June quarter of FY25.

Despite a 3-4% rise in refining throughput during the June quarter, analysts' estimates suggest auto fuel under-recovery for Indian Oil could be INR 543 billion, up four times from INR 132 billion in the March quarter. The company had an over-recovery of INR 88 billion in the June quarter last year, as per brokerages. Nuvama sees diesel retail margin at a negative INR 25.2 per litre in the June quarter, down from a negative INR 9.9 per litre a year ago. The brokerage sees recovery in petrol refining margin at a negative of INR 7.7 per litre, down from a negative INR 12.7 per litre in the year-ago quarter. Motilal Oswal Financial Services Ltd. estimates blended marketing margin for Indian Oil at a loss of INR 8 per litre and LPG under-recovery at INR 340 per cylinder.

State-owned oil marketing companies, including Indian Oil, sell LPG cylinders to a large section of domestic customers at a regulated price. When international gas prices are high, the company makes losses on these sales. These losses are known as under-recovery.

For the June quarter, Indian Oil's under-recovery on LPG is expected to widen sharply to INR 560 per cylinder due to the elevated Saudi contract price and a weaker rupee. The LPG under-recovery, which was INR 80-100 per cylinder in the March quarter, rose to INR 170 per cylinder in April and to nearly INR 670 per cylinder in May. Indian Oil serves over 155 million LPG customers. Brokerages do not see the partial compensation paid by the government for earlier losses, raised retail fuel prices, and better refining margins being enough to offset losses from selling fuels below cost. As a result, Indian Oil, like other state-owned oil marketing companies, would continue to report losses.

Kotak Securities Ltd. expects an adventitious loss of $2 per barrel in refining and $2.2 per barrel in marketing. The brokerage also sees under-recovery on domestic LPG for Indian Oil at INR 111 billion in the June quarter, up sharply from INR 24 billion in the March quarter, despite a compensation of INR 36.3 billion as a subsidy by the government.

Indian Oil's earnings before interest, tax, depreciation, and amortisation are expected to average at a negative INR 166 billion. The EBITDA estimates range from a loss of over INR 260 billion by Kotak Securities to an EBITDA of INR 11 billion by Nuvama. "We expect Indian Oil's EBITDA to fall by 92% YoY as weak marketing margins (on West Asia tensions) are offset by improvement in refining margins (+13x YoY). LPG under recoveries are expected to balloon on increase in propane prices (11% YoY, 31% QoQ), and anticipated 1% year-on-year fall in domestic retail sales on lower petroleum product consumption. We also anticipate petchemical segment to witness strong profitability on better spreads given higher prices on supply disruption," Nuvama said.

Indian Oil will report its June quarter earnings Friday. At 1017 IST, shares of the company traded at INR 139.53 apiece on the National Stock Exchange, down marginally. The stock is up 3% since the company reported its March quarter results on May 19.

Of the 11 research reports on the company available with Informist, seven have a "buy" recommendation on the stock with an average target price of INR 160 per share. This is nearly 15% higher than the current market price. Two brokerages have a "hold" recommendation and two have a "sell" call on the stock with an average target price of INR 138.

The following are the Apr-Jun earnings estimates for Indian Oil Corp., in INR billion, from 13 brokerages in descending order by estimate of net loss:

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Edited by Shubhayan Bhattacharya

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