IOCL Q3 net profit shrinks 76% to Rs 2,115 crore as refining margins fall

Despite growing sales and exports, lower crude prices pulled down revenue to Rs 2.19 trillion

Suffering from lower refining margins, state-run Indian Oil Corporation Ltd (IOCL) ended the third quarter of FY25 (October-December) with a net profit of Rs 2,115.29 crore (attributable to the owners), 76 per cent lower than the Rs 9,029.56 crore net profit registered in Q3FY24. On a sequential basis, however, the oil marketing company's net profit rose from the Rs 170 crore loss recorded in the preceding quarter.

 

The sharp reduction in year-on-year (Y-o-Y) net profit in Q3 came due to a crash in average gross refining margins (GRMs) – the revenue refiners accrue from transforming each barrel of crude oil into refined fuel products. IOCL reported that the average GRM stood at $3.69 per barrel in the first three quarters of FY25, 72.1 per cent lower than the $13.26 per barrel recovered in the same period of FY24.

 

The company's revenue from operations did not shrink significantly in the latest quarter, reducing by 3.24 per cent to Rs 2.19 trillion, compared to Rs 2.26 trillion in Q3FY24. This drop in revenue is primarily attributed to lower earnings from the largest segment of petroleum products, which dipped 4.1 per cent to Rs 2.05 trillion, down from Rs 2.14 trillion in the same quarter of the previous year. The fall in global crude oil prices reduced the company's earnings, despite higher domestic sales and exports in the latest quarter. With its 10 refineries accounting for a cumulative 80 million metric tonnes per annum (MMTPA) capacity, IOCL controls nearly 33 per cent of India's refining capacity.

 

Sales from the much smaller petrochemicals business, however, rose 3 per cent to Rs 7,201 crore, up 20.36 per cent from Rs 5,983 crore in Q3FY24. The quarter under review also saw a 12 per cent growth in revenue from other business activities to Rs 12,027 crore, compared to Rs 11,314 crore in the same quarter of the previous year.

 

However, IOCL's expenses rose by 0.87 per cent to reach Rs 2.18 trillion in Q3, up from Rs 2.16 trillion in the year-ago period. The cost of materials consumed, which rose by 7.6 per cent, and purchases of stock-in-trade, which increased by 6.1 per cent, were the two biggest contributors to the rise in expenses.

 

The company's shares fell 3.32 per cent to Rs 124 on Monday, losing 8.99 per cent in value over the past month.