IOC share price: Shares of Maharatna public sector undertaking (PSU) Indian Oil Corporation (IOC) extended gains to Tuesday’s trading session following a robust performance for the quarter ended September 30.
IOC share price rose 1.5% to its 52-week high of ₹157.50 on the BSE in early trade today – a day after the company posted a massive 42 times surge in its Q2 bottomline.
IOC Q2 Results
The oil marketing company’s profit stood at ₹7,610 crore for the second quarter of the fiscal year 2025-26 (FY26), as against ₹180 crore in the same period a year ago, resulting in a 4,128% year-on-year (YoY) rise.
IOC chairman Arvinder Singh Sahney told reporters that the net profit was higher mainly because of operational efficiencies and six-quarter high refining margins, as per a PTI report.
Revenue from operations jumped 4% YoY to ₹2,02,992.34 crore in Q2 FY26, as compared to ₹1,95,148.9 crore in the same period a year ago.
Another factor contributing to the profit was that the company recorded modest inventory gains for the first time in a year. In contrast, it had suffered significant inventory losses during July-September 2024, which had limited its net profit growth.
IOC Shares: Time to buy?
IOCL’s reported standalone EBITDA of ₹14,600 crore in Q2 FY26 was much higher than JM Financial’s estimate of ₹10,600 crore and the consensus estimate of ₹13,400 crore.
This strong performance was driven by a higher gross refining margin (GRM) of USD 10.7 per barrel, compared to JM Financial’s estimate of USD 6.5 per barrel, said the brokerage.
Profit after tax (PAT) was also much higher at ₹7,600 crore, versus JM Financial’s estimate of ₹4,100 crore and the consensus estimate of ₹5,700 crore, supported by higher other income.
The company’s integrated EBITDA margin was USD 8.9 per barrel in Q2 FY26, in line with the previous quarter (Q1 FY26) and above the estimated USD 6.5 per barrel.
Separately, the Ministry of Petroleum and Natural Gas (MoPNG) has approved a compensation of ₹14,490 crore for IOCL (out of the total ₹30,000 crore announced for all oil marketing companies) to cover LPG under-recoveries for FY25 and FY26. This compensation will be paid in 12 equal monthly instalments starting in November 2025.
IOCL did not record any of this compensation in Q2 FY26, but will start recognising it from Q3 FY26 on a receipt basis. The company’s LPG net under-recovery stood at ₹2,120 crore in Q2 FY26, resulting in a net negative LPG buffer of ₹25,770 crore at the end of the quarter.
However, despite the earnings beat, JM Financial reiterated ‘REDUCE’ on IOC shares (with an unchanged target price of ₹145) on valuation grounds as it is trading at 0.97x FY27 PB (versus the last 3-year average of ~0.9x). However, it’s likely to see strong earnings growth over FY27-28 due to refining capacity expansion by 18mmtpa or 25% in the next 12 months, the brokerage opined.
Another brokerage, Motilal Oswal Financial Services, also retained a ‘Neutral’ rating on IOC shares, even as the performance was above estimates.