Indian Oil Corporation Limited (IOCL), India’s largest oil company, reported a significant 64% decline in net profit for the December quarter of FY25, attributed to inventory and foreign exchange losses, along with reduced product margins.
The company’s standalone net profit for October-December 2024 stood at ₹2,873.53 crore, a sharp fall from ₹8,063.69 crore in the same quarter of the previous fiscal year, as per its stock exchange filing. However, profits showed a significant recovery when compared to the ₹189.01 crore posted in the preceding quarter (July-September 2024).
According to Indian Oil’s Director (Finance), the drop in earnings was largely due to an inventory loss impact of ₹7,800 crore and foreign exchange losses of ₹1,900 crore. Declining product cracks also contributed to the lower profitability.
Inventory losses occur when crude oil purchased at higher prices is later processed at lower prevailing market rates, leading to a financial hit. Conversely, inventory gains arise when prices increase after procurement. During the quarter, diesel cracks fell from $19.18 per barrel in Q3 FY24 to $10.8 per barrel, while petrol cracks dropped from $7.04 per barrel to $3.63 per barrel.
Refining margins also weakened, with Indian Oil’s gross refining margin (GRM) shrinking to $2.95 per barrel in Q3 FY25, compared to $13.53 per barrel in the same period last year.
Despite these challenges, the company achieved its highest-ever quarterly sales of 26.134 million tonnes, marking 6.2% growth year-on-year, stated Indian Oil Chairman AS Sahney. Petrochemical sales volumes rose by 7%, while gas trading volumes surged by 24%.
The company’s market share improved as well. Its share in public sector fuel sales rose from 46.4% in Q2 FY25 to 46.7% in Q3 FY25. Including private sector competitors, Indian Oil’s market share increased to 41.3% in Q3, up from 41.1% in the previous quarter.
