Indian Oil Corporation (IOC) has announced impressive financial results for the second quarter, with a net profit of Rs 12,967.32 crore. This substantial profit, achieved in the three months ending September 30, represents more than half of IOC’s best-ever annual profit recorded in just one quarter. The company’s turnaround to profitability is attributed to enhanced refining and marketing margins, as outlined in a recent stock exchange filing.
Factors Driving Profitability
The significant boost in refining margins, coupled with increased marketing margins, contributed to IOC’s remarkable performance. Despite a decline in input crude oil prices, a freeze on petrol and diesel price revisions supported the recovery of losses incurred during periods of high oil rates last year. Pre-tax earnings from the sale of petroleum products surged to Rs 17,755.95 crore in the second quarter of the fiscal year, showcasing substantial growth compared to the same period last year.
Impact of Price Freeze and Recovery
IOC, along with other state-owned fuel retailers, opted to freeze prices amidst a spike in global oil prices triggered by Russia’s invasion of Ukraine last year. This strategic decision aimed to shield consumers from price volatility but resulted in losses for the companies during the first half of the previous fiscal year. However, IOC’s robust performance this year has reversed the trend, with record earnings of Rs 26,717.76 crore in April-September 2023, surpassing its previous best net profit of Rs 24,184 crore achieved in the entire fiscal year of 2021-22.
Operational Highlights
Despite a slight decline in revenues to Rs 2.02 lakh crore in the July-September period due to lower oil prices, IOC maintained a strong operational stance. The company’s gross refining margin for April-September 2023 was USD 13.12 per barrel, compared to USD 25.49 in the same period last year. IOC sold 21.941 million tonnes of petroleum products in the September quarter, with refineries processing 17.772 million tonnes of crude oil into fuel during the same period.
Dividend Declaration and Future Outlook
IOC’s board of directors declared an interim dividend of Rs 5 per share for the current fiscal year, showcasing confidence in the company’s financial health and future prospects. With strong operational fundamentals and a strategic approach to market dynamics, IOC remains well-positioned to navigate challenges and capitalize on opportunities in the evolving energy landscape.
Ben Müller
