Skip to content

    I O C L

    IOCNeutral
    Oil, Gas & Consumable Fuels·28 Oct 2025
    Management Summary

    IOCL delivered a strong Q2 with PAT nearly doubling H1 FY25 performance, driven by improved HSD cracks, better operational performance, and LPG compensation clarity. The government approved Rs 30,000 crore LPG compensation for past under-recoveries, with IOC receiving Rs 14,486 crores in monthly installments. Current LPG loss is ~Rs 40/cylinder (down from Rs 100 in Q2). Three major refinery expansions (Panipat, Gujarat, Barauni) are all 84-90% complete and expected to commission in FY27. Project Sprint cost optimization is underway with a 20% cost reduction target. PetChem margins remain subdued but positive with PX-PTA project at Paradip (Rs 14,000 crores) expected in Q3 FY27.

    Highlights

    9

    • PAT of Rs 7,610 crores in Q2, up from Rs 5,689 crores in Q1; H1 PAT Rs 13,299 crores vs Rs 2,823 crores in H1 FY25

    • Revenue from operations Rs 2,02,992 crores; impacted by above-normal rainfall

    • Reported GRM $10.66/bbl, normalized GRM $8.91/bbl — both higher than Q1

    • Govt approved Rs 30,000 crore LPG compensation; IOC share Rs 14,486 crores in 12 monthly installments from Nov 2025

    • Russian crude at ~18-19% of throughput; discount ~$2-3/bbl

    • Panipat refinery expansion (10 MMTPA) at 90% physical progress, commissioning June 2026

    • Gujarat refinery expansion at 84% progress, Barauni at 88% — both commissioning FY27

    • S&P assigned BBB rating (equivalent to sovereign); Project Sprint optimization underway

    • Ethanol blending at 19.85%; Terra Clean targeting 30 GW renewables by 2030

    Concerns

    1

    • LPG remains controlled product — future under-recovery compensation uncertain beyond Rs 30,000 crores

    Key financials

    Metrics

    22

    Periods

    4

    Headline

    14
    • H1 FY26 PAT
      ₹13,299 Cr
    • H1 FY25 PAT
      ₹2,823 Cr
    • Capacity Utilization
      99.5%
    • H1 Product Sales
      50.59 MMT
    • Retail Outlets (total)
      41,263 outlets

    Q2

    6
    • PAT
      ₹7,610 Cr
    • Revenue
      ₹2.03L Cr
    • Reported GRM
      10.66 $/bbl
    • Normalized GRM
      8.91 $/bbl
    • Refinery Throughput
      17.6 MMT

    Q2 - highest ever

    1
    • Gas Sales
      1.84 MMT

    FY26

    1
    • Capex Budget
      ₹33,494 Cr

    Guidance & targets

    7
    CategoryTargetPriority
    Refining
    Panipat Expansion Commissioning
    June 2026, 10 MMTPA, 60% utilization in first year
    		High
    Refining
    Gujarat Expansion Commissioning
    June 2026, 84% physical progress
    		High
    Refining
    Barauni Expansion Commissioning
    August 2026 onwards, 88% physical progress
    		High
    Refining
    FY26 Standalone Throughput
    ~72-73 MMTPA
    		High
    Capex
    Annual Capex Range
    Rs 30,000-40,000 crores (including JVs/subsidiaries)
    		High
    Cost Optimization
    Project Sprint Cost Reduction
    20% of budgeted costs over 3 years
    		Medium
    Renewables
    Green Energy Capacity
    31 GW by 2030
    		Medium

    Risks & concerns

    4
    RiskSeverity

    LPG remains controlled product — future under-recovery compensation uncertain beyond Rs 30,000 crores

    Current loss Rs 40/cylinder. Over-recoveries if any will be treated as payable, not P&L. Government decides all settlements. — Management acknowledged

    high

    PetChem margins remain subdued — global overcapacity and weak demand

    PetChem earned Rs 2,000+ crores in H1 but margins constrained. Oxo-alcohol plant (Rs 6,000 crores) building 11% IRR assumption. — Management acknowledged

    medium

    Borrowings increasing — Rs 1.28 lakh crores with Rs 33,000+ crore annual capex

    Borrowings up Rs 6,692 crores QoQ due to working capital and FX translation. — Analyst acknowledged

    medium

    Crude price and crack spread volatility

    Above-normal rainfall already impacted Q2 volumes. OPEC+ unwinding adds uncertainty. — Management acknowledged

    medium

    Q&A highlights

    5

    “Income will be accrued to the company on a monthly basis... Rs 14,486 crores in 12 installments from November 2025.”

    Rs 30,000 crore LPG compensation is a significant earnings event; monthly recognition method affects quarterly P&L

    asked by Probal Sen (ICICI Securities) / Vikash Jain (CLSA)

    1 min read3 chapters

    Detailed Narrative

    01

    Strong Q2 on GRM and LPG Compensation Clarity

    Q2 PAT of Rs 7,610 crores driven by improved HSD cracks ($14 vs $10 YoY), normalized GRM of $8.91/bbl, and operational efficiencies including favorable freight economics. H1 PAT at Rs 13,299 crores represents a massive improvement from Rs 2,823 crores in H1 FY25. The government's approval of Rs 30,000 crore LPG compensation (IOC share Rs 14,486 crores) removes a key earnings overhang. Current LPG loss has halved from Rs 100 to Rs 40/cylinder.

    02

    Massive Capacity Expansion Pipeline — Three Refineries in FY27

    Three brown-field refinery expansions at advanced stages: Panipat (10 MMTPA, 90% complete, June 2026), Gujarat (84% complete, June 2026), and Barauni (88% complete, August 2026). All expected 60% utilization in year one. Additionally, PX-PTA at Paradip (Rs 14,000 crores, 90% complete, Q3 FY27) and Poly Butadiene Rubber at Panipat (Rs 3,000 crores, 70% complete, June 2026). Combined capex of Rs 33,494 crores budgeted for FY26.

    03

    Strategic Initiatives — Sprint, Renewables, Gas

    Project Sprint is a 3-year cost optimization program targeting 20% reduction on budgeted costs across all verticals. Green shoots visible but specific numbers expected by Q3. Terra Clean subsidiary targeting 30 GW renewables by 2030 with 4-5 GW annual commissioning. Largest green hydrogen plant (10 KTA) at Panipat underway. 15 hydrogen fuel cell buses in testing. Ethanol blending at 19.85%. First Henry Hub-linked LNG contract signed with Trafigura (0.4 MMTPA, Jul 2025-Dec 2029). Record quarterly gas sales of 1.84 MMT.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.