Indian Oil Corporation Ltd (IOC) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator (Antique Stock Broking Limited): Ladies and gentlemen, good day, and welcome to the Indian Oil Corporation Limited Q2 FY '27 results call, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stock Broking Limited. Thank you, and over to you.
Varatharajan Sivasankaran (Antique Stock Broking Limited): Thank you, Alicia. Very good morning, ladies and gentlemen. It's my pleasure to welcome all the participants, as well as the management of Indian Oil Corporation. We have with us today Mr. Anuj Jain, Director (Finance); Mr. Nitin Kumar, ED Corporate Finance and Treasury; and Mr. Pramod Jain, CGM Treasury, along with his team. I'd like to hand over the call to Mr. Anuj Jain for his opening remarks. Over to you, sir.
Anuj Jain (Indian Oil Corporation Ltd): Thank you. Dear investors and analysts, a very good morning to all of you. I take this opportunity to welcome all of you to the conference call organized by us post announcement of the second quarterly results of financial year 2026-'27. I trust you had had an opportunity to review the financial results and accompanying disclosures published on our website and stock exchanges, along with the updates shared with you. In today's call, we would like to walk you through our performance for the quarter gone by, provide some insights on the broader macroeconomic context, and also share with you the strategic initiatives we are pursuing to strengthen our position as India's largest energy company. Before I move to the operational and financial highlights, let me briefly touch upon the evolving geopolitical developments and their implications for the global energy markets.
Anuj Jain (Indian Oil Corporation Ltd): volatility in global energy markets. Following the onset of US-Iran hostilities towards the end of February 2026, global crude oil prices witnessed a significant spike. The Indian basket crude price, which averaged around USD 65 to 70 per barrel in Feb, remained above the USD 100 per barrel mark during most of Q1 financial year '26-'27. During Q2, crude oil prices remained relatively moderate with Indian average basket largely ranging between USD 85 to 95 dollar per barrel during July and August before witnessing renewed upward pressure and escalating geopolitical tensions in September. Supply-side uncertainties continued to persist with disruptions to commercial shipping in vicinity of the Strait of Hormuz, coupled with elevated freight and war risk insurance costs. The Indian basket has remained above USD $100 per barrel mark on a sustained basis since September, averaging around USD 120 per barrel in October 2026. Amid these heightened geopolitical uncertainties and evolving global trade flows, Indian Oil continues importing secure, reliable, economically competitive crude oil grades from diverse countries while managing challenges of high market volatility. Logistics challenges in terms of ships, insurance, freight costs among other things, remains a cause of concern. Amidst disruptions, we diversified our sourcing by increasing imports from other geographies like Russia, Venezuela, Brazil and even some from African countries, thereby, ensuring continuity of crude oil imports to maintain our planned refinery operations. The spot imports for the half year stood at about 87% against 50% during the last financial year. As regards our performance for Q2 financial year '26-'27, we reported a net profit of rupees 21,630 crores compared to net loss of rupees 2,661 crore in the preceding quarter and profit after tax of 7,610 crore in the corresponding quarter of financial year '25-'26. From a half year perspective, the PAT is rupees 18,969 crore as against rupees 13,299 crore in H1 financial year '25-'26. Higher inventory gains and other multiple factors have contributed towards the profitability for the period. Revenue from operations during this quarter stood at rupees 2,62,936 crore against rupees 2,75,972 crore in the preceding quarter for this year. The revenues for the corresponding quarter of financial year '26 was rupees 2,02,992 crore. Beyond navigating the near-term challenges in the global energy environment, Indian Oil continues to focus on strengthening operational excellence across its integrated business. Our refining capabilities, extensive pipeline infrastructure and nationwide marketing network remain key strength in ensuring supply reliability, improving operational efficiency and supporting the country's growing energy requirements. At the same time, we continue to pursue opportunities in cleaner energy and emerging businesses as part of our long-term growth strategy to support India's evolving energy requirements and transition objectives. Friends, now the operational and financial highlights will be briefed by Shri Nitin Kumar, Executive Director, Corporate Finance and Treasury, Indian Oil. Thank you.
Nitin Kumar (Indian Oil Corporation Ltd): Thank you, sir. Dear investors and analysts, a very good morning to you all. Kindly note that today's discussion may include forward-looking statements which are based on currently available information, assumptions and expectations and are subject to uncertainties that could cause actual results, performance or achievements to differ materially from those expressed or implied. Participants are advised to refer to the company's latest filings with regulatory authorities for a more detailed discussion on the risk and uncertainties. Before turning to our numbers, let me briefly touch upon the macro backdrop against which this quarter played out. The quarter saw a notable shift in the global macroeconomic environment environment developments in West Asia
Nitin Kumar (Indian Oil Corporation Ltd): and higher and revised inflation concerns, taking global sovereign bond yields to multi-year highs. Central banks responded firmly. The US Fed raised rates by 25 basis point in September, and the RBI followed suit in October with a 25 basis repo rate increase to 5.5%, reinforcing its commitment to price stability. Coming to the forex market, the rupee remained highly volatile during Q2 of this financial year. It depreciated to a quarterly low of about 96.58 per USD in July after US-Iran escalations. However, it recovered to around 94.5 per USD, aided by strong FCNR(B) inflows under RBI facility. The rupee could not hold the gains and closed the quarter at 95.84 per USD after Fed rate hike. Recently rupee recovered to below 95 per USD levels after RBI measures. The rupee is expected to remain volatile under this uncertain global geopolitical environments. On the growth front, India continues to stand out. The IMF has raised India's FY '26-'27 growth forecast to 7%, well above global growth of 3.1%, citing resilient domestic demand. The strength is reflected in energy demand as per PPAC data. Domestic consumption of petrol, that is, MS, and diesel, that is, HSD, grew by 8.5% and 7.5%, respectively, in Q2 of FY '26-'27 compared with Q2 of FY '25-'26. This provides a strong foundation for demand across our businesses. The average price of crude, that is, Indian basket, declined to $96.16 per barrel in Q2 of this year from $100.74 per barrel in Q1 of last year of this year, sorry. However, the ongoing US-Iran conflict and heightened geopolitical uncertainties continue to exert upward pressure on global crude oil prices, keeping energy market volatile. Now let me briefly touch upon the quarterly performance highlights. While navigating a volatile global energy environment, we have continued to balance market stability with commercial considerations. Our strong volume base, extensive marketing network, and focus on operational efficiencies and product mix optimization provide a sound foundation to support earnings earnings resilience and position us to benefit from an improvement in marketing margins as market conditions evolve. Talking about the numbers, now let me briefly touch upon the major verticals. Refineries. During the quarter, refineries achieved crude throughput of 18.1 MMT with a with a capacity utilization of 102.3% in comparison to throughput of 19.2 MMT with a capacity utilization of 109.4% during the preceding quarter. For the corresponding quarter of 25- of FY '25-'26, the throughput was at 17.6 MMT with a capacity utilization of 99.4%. On July 12, 2026, Panipat refinery became the first Indian oil refinery to produce all-weather grade high-speed diesel, reinforcing Indian Oil's commitment for meeting the fuel requirements of the nation's armed forces operating under extreme conditions. Pipelines. During the quarter, pipeline throughput was 25.3 MMT with a capacity utilization of 64.3% vis-a-vis 28.5 MMT during the preceding quarter with capacity utilization of 79.9%. During the corresponding quarter of FY '25-'26, the capacity utilization was about 66.7% with throughput of 24.1 MMT. Marketing. The total sales volume during the quarter was 25.228 MMT, as compared to 26.211 MMT during the preceding quarter, and 24.262 MMT in Q2 of FY '25-'26. During the quarter, 126 retail outlets were commissioned, taking the total number to 43,245. Under significant strategic development, Indian Oil signed a sale purchase agreement with the State Trading Corporation of Mauritius under G2G framework MoU between government of India and government of Mauritius. Pursuant to this, Indian Oil will meet 100% requirement of motor gas and gas oil, that is, HSD and Jet A-1/ATF of Mauritius on delivered basis for next 5 years. Petrochemicals. The sale of petrochemical petrochemical products, including exports, during this quarter was 0.858 MMT, compared to sale of 0.768 MMT in the preceding quarter. Gas. During the during the quarter, we registered gas sales of 1,933 TMT, which includes CGD sales of 76 TMT, as compared to total gas sales of 1,873 TMT, including CGD sales of 67 TMT during the preceding quarter. In a significant development, Indian Oil has been entrusted with development entrusted with developing the gas supply infrastructure
Nitin Kumar (Indian Oil Corporation Ltd): agreement with NTPC Vidyut Vyapar Nigam Limited, a subsidiary of NTPC for the supply of regasified LNG to the upcoming gas-based power projects in Andaman and Nicobar Islands. Additionally, IndianOil is also developing a Floating Storage and Regasification Unit that is FSRU based infrastructure to supply natural gas to power plants in the islands. Renewable energy, IndianOil is working to strengthen its position at the forefront of India's bio-fuel and energy transition agenda aligning with nation's twin objective of energy security and decarbonization across hydrogen and green hydrogen, ethanol, bio-diesel, CBG, and SAF. The corporation continues to scale commercial capacity and deepen its partner ecosystem. As informed earlier, Terra Clean Limited is our wholly owned subsidiary is working in renewable energy activities, including wind and solar projects. The company has received connectivity approvals for 2.65 GW capacity on Central Transmission Unit that is CTC CTU and State Transmission Utility that is STU. Further, the company has been allotted 423 acres of land in the state of Uttar Pradesh for for development of solar power plant of around 100 million 100 megawatt. Terra Clean Limited is a is aggressively exploring commercial and industrial customers across India for providing reliable green power to long-term power purchase agreements under the group captive open access mode. CapEx, during April to September 26, the company incurred a total CapEx of 12,162 crore, encompassing investment across all verticals. The budgeted CapEx target for the for the financial year 20 26-27 is 32,700 700 crore. These investments are aligned with our long-term strategic road map and national energy priorities. In September 2026, Paradip PX-PTA project has been mechanically completed, commissioning activities are in progress. The major refining expansion project in Panipat, Barauni and Gujarat are at advanced stage stages of execution and are targeted for completion during 26-27. Phase-wise commissioning of process unit, utilities and offsite facilities are being undertaken in a structured manner to enable progressive capacity buildup and integration. Borrowings, with respect to the borrowing levels, the borrowing as on 30th September 2026 was at rupees 1,16,578 crore level compared to 1,41,453 crore as on 30th June, 2026. The reduction in borrowing level is primarily driven by higher profitability and favorable working capital changes. As on 30th September, 2026, the company's gross debt to equity ratio stood at 0.54, reflecting a comfortable leverage profile. After adjusting for financial investments, the net debt-equity ratio further strengthens to 0.35, positioning us well to pursue opportunities, absorb market volatility and maintain financial strength across cycles. With this, I take a pause and request Director Finance for his further remarks.
Anuj Jain (Indian Oil Corporation Ltd): Thank you, Nitin. I would like to extend my sincere appreciation to our investors and all stakeholders for their continued confidence and support. We remain focused on delivering consistent performance, maintaining financial discipline and strengthening our competitiveness while creating sustainable long-term value for our shareholders and all stakeholders. With that, I will end our briefing here. We would now be happy to take your questions. Thank you.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Probal Sen (ICICI Securities): Yeah. Good morning, sir. Thank you for the opportunity and congratulations for a very strong set of numbers. Firstly, can I have the refining margins for this quarter, broken down into core and inventory gains like you generally give?
Anuj Jain (Indian Oil Corporation Ltd): Yeah. You can note down. During quarter two 26-27, we had a gross refining margins of $18.52 per barrel which is excluding SAED and considering the SAED impact, the GRMs stood is 36. 67 dollar per barrel.
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