Updated January 26th, 2024 at 14:03 IST

Indian Oil Corporation beats estimates in Q3 on strong refining margins

The beat was attributed to a higher-than-expected Gross Refining Margin (GRM) at $13.5 per barrel (bbl) against an estimated $10.2 per bbl.

Reported by: Business Desk
Indian Oil
Indian Oil | Image:Indian Oil

IOCL Q3 earnings: Indian Oil Corporation (IOCL) has outperformed market expectations in its third quarter of current financial year, reporting earnings before interest, taxes, depreciation, and amortisation (EBITDA) also known as operating profit of Rs 15,500 crore, marking an annual jump of 2.9 times, analysts noted.

The beat was attributed to a higher-than-expected Gross Refining Margin (GRM) at $13.5 per barrel (bbl) against an estimated $10.2 per bbl and elevated marketing gross margin at Rs 4.5 per litre as against estimate of Rs 3.1 per litre, analysts said.


GRM and marketing margin surge

IOCL's Q3 EBITDA of Rs 15,500 crore is a major beat, primarily driven by an impressive GRM at $13.5/bbl, exceeding the estimated $10.2/bbl, and a robust marketing gross margin at Rs 4.5/lit, surpassing the estimated INR3.1/litre, according to brokerage firm Motilal Oswal.

Image credit: Indian Oil

Meanwhile, the refining throughput stood at 18.5 million metric tonnes (mmt), aligning with estimates and reflecting a 4 per cent annual increase. Domestic sales volumes in the marketing segment also met expectations at 23.3 mmt, showcasing a 1 per cent annual growth.

Singapore GRM rebounded to $7.2/bbl in the December quarter, indicating a potential improvement in refining performance in the upcoming quarter.


While petrochemical (petchem) sales volumes surged by 80 per cent annually to 0.67 mmt, the petchem segment reported an earnings before interest, tax (EBIT) loss of Rs 200 crore.

However, increased margins for Polyethylene (PE) and Polypropylene (PP) in the fourth quarter may contribute to a recovery in the segment in the next quarter, the brokerage firm said in a note.


Given the robust performance in the first nine months (9MFY24), IOCL has revised its EBITDA and PAT estimates by 12 per cent and 16 per cent, respectively for FY24. However, FY25-26 estimates remain broadly unchanged.

Projects in pipeline

IOCL is set to commission various projects in the next two years, contributing to further growth. Notable projects include the Panipat refinery (25 mmtpa) by Sep’24, Gujarat refinery (18 mmtpa) by Aug’24, and Baruni refinery (9 mmtpa) by December 2024.

Motilal Oswal analysts reiterate a ‘Buy’ rating on the stock, with a target price of Rs 165.


Furthermore, IOCL's strong December quarter performance, especially in refining and marketing, showcased resilience in a challenging market environment.

The company's strategic projects and potential recovery in the petrochemical segment bode well for its future prospects, although market dynamics and external factors may influence its trajectory in the coming quarters. Meanwhile, investors remain optimistic about IOCL's growth potential, the Mumbai-based brokerage added.


Published January 26th, 2024 at 14:03 IST

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