IOC Q3 Results: Profit Soars to ₹12,126 Crore in FY26

Introduction

Indian Oil Corporation Ltd. (IOC), India's largest state-owned refiner, announced a robust financial performance for the third quarter of fiscal year 2026, ending in December. The company reported a substantial increase in net profit, driven by strong refining margins and operational efficiencies. The positive results buoyed investor sentiment, leading to a rise in the company's share price on February 5, 2026.

Stellar Quarterly Financials

IOC posted a net profit of ₹12,126 crore for the December quarter, a significant increase from the ₹7,610.5 crore recorded in the preceding quarter. This performance underscores a sharp turnaround from the same period last year, which was marked by margin pressures from volatile crude prices and inventory losses. Revenue from operations for Q3 FY26 grew by 7% year-on-year, reaching ₹2,31,000 crore compared to ₹2,16,000 crore in Q3 FY25. The company's Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) demonstrated strong sequential growth, climbing 42.8% to ₹20,824.8 crore from ₹14,584.8 crore in the previous quarter. This surge expanded the EBITDA margin by 200 basis points to 10.2%.

The Refining Margin Advantage

A key driver behind IOC's impressive profitability was its performance in the refining segment. The company's Average Gross Refining Margins (GRMs) for the nine-month period from April to December stood at a healthy $1.41 per barrel, a significant improvement from the $1.69 per barrel recorded in the same period of the previous year. Core GRMs, which exclude inventory effects, were even stronger at $1.86 per barrel. This performance was supported by a favorable global environment, with the benchmark Singapore GRM averaging $1.5 per barrel during the quarter, up from about $1 per barrel a year ago. The combination of cheaper crude oil feedstock and higher price spreads for refined products directly contributed to the enhanced margins and bottom line.

Segment-wise Revenue Breakdown

IOC's revenue mix in the third quarter was predominantly led by its core petroleum products business. This segment continues to be the primary contributor to the company's topline. The petrochemicals and gas segments also provided stable contributions, reflecting the company's diversified operational base.

Operational Context and Cost Management

The strong quarterly results were achieved against the backdrop of a weak base in the previous year. In Q3 FY25, IOC's profitability was hampered by volatile crude prices, inventory losses, and elevated operating costs. The current quarter benefited from relatively stable crude prices, which averaged around $14 per barrel compared to $14 per barrel in the same quarter of 2024. Despite total expenses rising slightly to ₹2,16,000 crore from ₹2,15,000 crore year-on-year, the company's improved refining and marketing performance led to a massive surge in profit before tax (PBT) to ₹15,992 crore, up from just ₹3,470 crore in the year-ago quarter.

Market Reaction and Analyst Expectations

The market responded positively to the strong earnings announcement. On February 5, IOC's shares closed 2% higher at ₹176.25. This adds to an impressive run for the stock, which has gained 40% over the past twelve months. The results surpassed the average expectations of market analysts. Prior to the announcement, a consensus of ten brokerages had estimated a consolidated net profit of around ₹9,200 crore. The actual figure of ₹12,126 crore comfortably beat these projections.

Outlook and Forward View

The robust performance in the December quarter has strengthened the positive sentiment surrounding public sector oil marketing companies. Factors such as stable crude prices, better visibility on fuel pricing, and improving global refining margins are expected to continue supporting the sector. Analyst recommendations remain largely positive for IOC. Out of ten research reports reviewed, six maintained a "buy" recommendation with an average target price of ₹182 per share, suggesting further upside from its current market price. The company's ability to leverage its scale and operational efficiency positions it well to navigate the dynamic energy market.

Conclusion

Indian Oil Corporation's Q3 FY26 results highlight a period of significant financial recovery and operational strength. The multi-fold jump in net profit, driven by superior refining margins and a stable cost environment, demonstrates the company's resilience and operating leverage. As IOC continues to benefit from favorable market conditions and internal efficiencies, its performance remains a key indicator of the health of India's broader energy sector.