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Informist, Saturday, Aug 1, 2026

 

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--IOC: Need to spend capex of over INR 1 trillion in next 5-6 years
--CONTEXT: Comments by IOC mgmt from in post-earnings analyst call
--IOC: May need to spend capex of INR 200-300 bln over next 2-3 years
--IOC: Saw inventory loss of $3-4 per bbl on gross refining margins in Q1
--IOC: Saw inventory gain of INR 150 bln on finished goods in Q1
--IOC: Expect crude throughput at 85 mln tn per annum in FY28
--IOC: Sure we will get govt support for LPG under-recoveries
--IOC: Our crude buy cost roughly at $1-2/bbl discount to Brent pre-war
--IOC: Paid premium of $10/bbl over Brent to buy crude post West Asia war
--IOC: Have achieved target of 20% ethanol blending for Motor Spirit
--IOC: Borrowings up to INR 1.41 tln on Jun. 30 vs INR 1.1 tln on Mar. 31
--IOC: Target to invest, add 18GW renewables over next 3-4 years
--IOC: Expect refining throughput at 77 mtpa in FY27, 90 mtpa in FY29
--IOC: Hope to commission 5 projects with INR 900 bln capex by December
--IOC: Spot crude sourcing jumped from 50% pre-war to high of 84% post war
--IOC: Hope to achieve savings of INR 20 billion, same as last year

 

By Sunil Raghu and Arundathi A R

 

AHMEDABAD/MUMBAI – Indian Oil Corp. Ltd. could spend around INR 1 trillion in capital expenditure over the next five to six years, including INR 300 billion-INR 400 billion in the coming two to three years, to complete projects on hand, the company's management told analysts on Saturday in a post-earnings analysts call.

 

"The registered capex target for this year is Rupees 32,700 crores (INR 327 billion). These investments are aligned with our long-term strategic roadmap and national energy priorities," the company management said. Of the projects planned, the management hopes to commission five projects incurring an investment of INR 900 billion by the end of the current calendar year. These include expansion of Panipat refinery from 15 million tonnes per annum to 25 mtpa at a cost of INR 380 billion by the end of December, Expansion of Barauni refinery from 6 mtpa to 9 mtpa at a cost of INR 180 billion in November, Petrochemicals project by September, poly butadiene rubber plant at Panipat for INR 30 billion by December.

 

The management added that while it did not have any specific target of capital expenditure, it had targets for growth or expansion in specific sectors. For example, the company seeks to invest in adding at least 18 gigawatt of renewable energy projects over the coming two to three years.

 

Post expansions, the company sees refinery throughput to rise from expected 77 million tonnes per annum in 2026-27 (Apr-Mar) to 85 mtpa in FY28 and 90 mtpa in FY29. In the meantime, the company said it has completed the government-required 20% blending of motor spirt with ethanol.

 

On being asked about the under-recovery on LPG, the official said that it was INR 665 per cylinder for the month of June, and INR 475 per cylinder in July. The official said he expected LPG under-recovery to be around INR 250 per cylinder for the September quarter, on fluctuating Saudi contract price.

 

"On LPG, based on the past practice, we are confident that suitable compensation for LPG under recovery will be considered. Yes, there would be uncertainty in the time of compensation and the quantum. But we are definitely sure that on the LPG part, we are going to get support," the official said.

 

IOC said that as of Jun. 30, it had an outgo of INR 297.30 billion on sale of liquefied petroleum gas cylinders to customers at discounted price on the government directive. Of this, it has received INR 36.21 billion, which it has recognised as revenue for operations in the books of accounts. The government has informed the company that it will pay compensation of INR 144.9 billion towards under-recoveries on the sale of domestic LPG up to Mar. 31, 2025, and likely to be incurred up to Mar. 31, 2026. Compensation for under-recoveries will be disbursed in 12 equal monthly instalments, from November and thereafter disbursed accordingly, the company said in notes accompanying its earnings filing.

 

The company recorded a net loss of INR 26.61 billion for the quarter against a net profit of INR 56.89 billion in the year-ago quarter. The revenue from operations for the quarter jumped 26% on year to INR 2.76 trillion. The company's top line, net of excise duty, was INR 2.62 trillion. The company had an inventory loss of INR 948.58 billion for the quarter. A company official Saturday told analysts that the company saw an inventory loss of $3-$4 per barrel on gross refining margins in June quarter, and an inventory gain of INR 150 bln on finished goods.

 

The official said the company that normally bought crude at a discount of roughly $1-$2 per barrel to Brent price in pre-West Asia war, has paid a premium of up to $10 per barrel over Brent price after the war in West Asia started. Its sourcing of spot cargo, too, has gone up from little over 50% pre-war to a high of 84% in post-war period.

 

India's largest state-owned oil marketing company is stated to have recorded GRM of $15.59 per barrel for the June quarter. If special advalorem excise duty on exports is included, this figure would rise to $36 per barrel. The gross refining margin shows a refinery's operational efficiency and is a key profitability metric for refiners.

 

Talking of capex and operational expenses, the official stated that the company had achieved savings of nearly INR 22 billion during FY26 by reducing maintenance costs, and supply chain optimisation. "For FY27, we are again targeting similar number in savings, at INR 20-22 billion from this initiative," the official said.

 

On Friday, shares of the company closed 0.16% higher at INR 140.17 apiece on the National Stock Exchange.  End

 

Edited by Deepshikha Bhardwaj

 

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