Indian Oil Corporation (IOC), India's largest state-owned oil refiner, posted a 174% year-on-year surge in consolidated net profit to ₹22,503 crore in the July–September 2026 quarter (Q2 FY27), staging a sharp recovery after slipping into a ₹1,141 crore net loss in the preceding quarter. In the same quarter a year ago, the company had reported a net profit of ₹8,191 crore.

What drove the turnaround

The company attributed the strong Q2 performance primarily to a temporary decline in crude oil prices between mid-June and mid-August, which bolstered refining margins, alongside robust earnings from petrochemicals and gas operations. Revenue from operations rose 30% to ₹2.68 lakh crore during the quarter, reflecting both higher volumes and improved realisation.

Notably, the sharp improvement in refining margins helped IOC offset the ongoing losses it has been incurring on retail sales of petrol and diesel. Public sector oil marketing companies (OMCs), including IOC, have kept retail fuel prices unchanged even as crude costs surged, absorbing the gap rather than passing it on to consumers.

LPG under-recoveries remain a drag

The cumulative net negative buffer from under-recoveries on domestic LPG sales stood at ₹32,505.69 crore as of 30 September 2026, even after accounting for government compensation received during the six-month period. The company recognised ₹7,243.02 crore as revenue from operations against this compensation in H1 FY27.

Operational highlights

Domestic fuel sales rose 4.8% to 23.9 million tonnes (mt) in Q2, although exports fell 11.3% during the same period. Refinery crude throughput for the first half of FY27 (H1 FY27) improved 3% to 37.273 mt, with capacity utilisation at 105.8%, up from 36.292 mt a year earlier. The company's cross-country pipeline network recorded a combined throughput of 53.896 mt in H1 FY27, a 7% improvement from 50.343 mt in the same period last year.

Risks ahead

Despite the strong quarterly showing, IOC flagged significant headwinds for coming quarters. In its official statement, the company warned: 'Profitability in upcoming quarters may be adversely impacted by inventory losses due to a potential fall in crude oil prices with normalisation of the situation in West Asia.' A sustained easing of geopolitical tensions in West Asia could push crude prices lower, triggering inventory write-downs that may reverse a portion of the gains recorded in Q2. The structural challenge of absorbing marketing losses on fuel sales without a price revision remains unresolved, keeping earnings visibility clouded into H2 FY27.