New Delhi, India — State-run energy giant Indian Oil Corporation (IOC) reported a massive jump in profits for the financial year 2025-26, driven by stronger refining margins, higher fuel sales, improved operational performance, and government support for cooking gas subsidies.
The company posted a standalone net profit of ₹36,802 crore ($4.4 billion), compared with ₹12,962 crore in FY25 — a sharp 184% year-on-year increase. On a consolidated basis, including subsidiaries such as Chennai Petroleum Corporation Limited (CPCL), profit attributable to shareholders climbed 210% to ₹42,096 crore.
The earnings rebound marks a dramatic recovery after FY25, when IOC faced severe pressure from losses on subsidized LPG (liquefied petroleum gas) sales and weak refining margins.
LPG Compensation Played a Major Role
A key contributor to the profit surge was the Indian government’s compensation for LPG under-recoveries. IOC recognized ₹6,035.85 crore in subsidy compensation between November 2025 and March 2026, helping offset losses incurred from selling cooking gas below market prices.
Despite the support, IOC said its cumulative LPG loss buffer widened further to ₹23,101 crore as of March 31, 2026, highlighting continued financial pressure from subsidized domestic fuel sales.
Analysts noted that without the subsidy recognition, the company’s profit growth would have appeared significantly lower.
Revenue and Margins Improve
IOC’s standalone revenue from operations rose 5% to ₹8.86 lakh crore, while consolidated revenue increased to ₹9.01 lakh crore.
The company’s operating margin expanded sharply to 5.84%, compared with 2.11% in the previous year, reflecting healthier refining and marketing conditions across India’s energy sector.
Net profit margin also improved substantially to 4.15% from 1.53% a year earlier.
Finance costs declined nearly 9% as IOC reduced short-term borrowings. The company’s debt-equity ratio improved to 0.54 from 0.75, strengthening its balance sheet and lowering interest burden.
Impairment Charges Raise Concerns
Despite the strong earnings, IOC recorded more than ₹2,431 crore in impairment losses during FY26.
The company wrote down ₹1,212 crore linked to non-fossil fuel and off-gas projects due to changing market conditions. It also booked a ₹1,219 crore impairment against its overseas investment arm, IndOil Global BV, following an independent valuation review.
The overseas write-down has raised concerns among analysts about the long-term performance of some international assets.
Q4 Results Show Mixed Trend
For the January–March 2026 quarter, IOC reported standalone net profit of ₹11,378 crore, up 57% from the same period last year.
However, compared with the previous quarter, profit declined 6.2%, indicating some moderation in momentum.
The consolidated business performed better, with group profit rising more than 12% sequentially, largely helped by stronger contributions from subsidiaries including CPCL.
Record Operational Performance
IOC also delivered record operational numbers during FY26.
The company processed 75.45 million metric tonnes (MMT) of crude oil — the highest in its history — with refinery utilization exceeding 107%.
Total fuel sales crossed 105 MMT, another company record. Domestic fuel sales grew 4.8%, outperforming India’s overall industry growth rate of 4.3%.
Institutional diesel sales emerged as a standout segment, rising more than 21% year-on-year.
Pipeline throughput, petrochemical sales, and exports also registered healthy growth during the fiscal year.
Middle East Conflict Creates Supply Risk
IOC disclosed that several crude oil and LPG shipments were temporarily stranded in the Persian Gulf region due to the ongoing West Asia conflict.
As of March 31, 2026, three crude shipments worth ₹5,411 crore and five LPG cargoes valued at ₹618 crore were impacted.
The company stated that all LPG shipments had been received by May 18 and that the cargoes were fully insured. IOC also said FY26 profitability remained largely protected because inventories had been procured before regional tensions escalated.
Dividend Increased
IOC’s board recommended a final dividend of ₹1.25 per share. Combined with the interim dividend of ₹7 already paid, the total FY26 dividend stands at ₹8.25 per share, significantly higher than the previous year.
The higher payout reflects management’s confidence in the company’s improved financial position and operational recovery.
