Detailed Narrative
Record Operational Volumes Amid Margin Compression
IOC achieved historic milestones with total sales crossing 100 MMT (100.29 MMT, up 2.9% YoY) and pipeline throughput reaching 100.5 MMT for the first time. Refinery throughput in Q4 was 18.5 MMT at 107.1% utilization with distillate yield of 79.7%. However, this volume growth was insufficient to offset the sharp decline in refining margins from FY24's $11.44/bbl normalized GRM to $4.53/bbl in FY25.
Refining Margins and Russian Crude Dynamics
Q4 reported GRM was $7.85/bbl, significantly better than Q3's $2.95/bbl, benefiting from inventory gains. Normalized GRM at $5.39/bbl was slightly lower QoQ. Russian crude comprised 22% of FY25 intake but fell to 14% in Q4; management expects 24-25% in FY26 with increased availability. US crude imports rose from 4% to 9% in FY25, acquired purely on economic optimization basis.
Massive Capacity Expansion Nearing Completion
Three refinery expansions adding 18 MMTPA are in advanced stages: Panipat (15 to 25 MMTPA), Gujarat (13.7 to 18 MMTPA), and Barauni (6 to 9 MMTPA). Panipat and Gujarat target Q4 FY26 commissioning while Barauni targets Q1-Q2 FY27. All have crossed 80% physical progress. Post-expansion, IOC's total capacity including CPCL will exceed 100 MMTPA. PX-PTA Paradip (Rs. 14,000 crores) expected by April 2026.
Petrochemicals Under Pressure But Strategic Commitment Continues
PetChem reported EBIT loss of Rs. 200 crores for FY25 though EBITDA was positive at Rs. 1,000 crores. PTA and glycol spreads were particularly weak while polymer spreads held up. Management remains committed to increasing PetChem intensity from 6% to 15% by 2030. Oxo-alcohol project at Gujarat commissioned in May 2025. PX-PTA at Paradip and PBR at Panipat are upcoming major additions.
LPG Under-Recovery and Financial Sustainability Concerns
LPG under-recovery stood at Rs. 170 per cylinder with no clarity on government compensation timing or quantum. Full-year FY25 under-recoveries across 3 OMCs estimated at Rs. 19,000-20,000 crores. Management actively engaging with government but no commitments received. Borrowings rose Rs. 18,000 crores YoY to Rs. 1,34,466 crores (D/E 0.75), though crude price decline could release Rs. 10,000 crores in working capital per $10/bbl drop.