Home / Business and Economy / IOC Earnings Soar as Refining Margins Boost Q2 Performance
IOC Earnings Soar as Refining Margins Boost Q2 Performance
28 Oct
Summary
- EBITDA rose 16%, margin expanded to 8.2% from 6.5%
- IOC's core PAT exceeded estimates, aided by inventory gains
- Brokerage firms maintain 'buy' ratings, see upside potential
In the second quarter of 2025, Indian Oil Corporation (IOC) reported a strong financial performance, with EBITDA rising 16% and the EBITDA margin expanding significantly to 8.2% from 6.5% a year ago. This was well above the estimated 6% margin.
The company's core profit after tax (PAT) of Rs 97 billion exceeded both consensus and Morgan Stanley's estimates, even after adjusting for an estimated inventory gain of Rs 6.7 billion and foreign exchange losses of Rs 14 billion. IOC's integrated margin stood at US$12.6 per barrel, including an LPG loss of US$1.5/bbl, which was above expectations and represented the company's best margin in two years, despite a reduction in Russian crude intake.
Brokerage firms such as Jefferies, Morgan Stanley, and Nomura have maintained 'buy' ratings on IOC, with revised target prices ranging from Rs 160 to Rs 190. The brokerages noted that IOC's strong refining margins more than offset the weakness in the marketing segment, which declined sharply quarter-on-quarter but remained in line with expectations. Additionally, the government's expected compensation for past LPG losses is likely to provide a significant boost to IOC's earnings over the next two fiscal years, improving cash flows and helping to reduce net debt levels.
