IOCL Q4 profit soars 52% to ₹10,841 cr; stock rises

India's largest fuel retailer, Indian Oil Corporation Ltd (IOCL) on Tuesday reported a 52% jump in its net profit at ₹10,841 crore for the quarter ended March as compared to ₹7,089 crore in the year-ago quarter.

The state-run oil marketing company's revenue from operations jumped 10% year-on-year to ₹2.30 lakh crore during the fourth quarter compared with ₹2.09 lakh crore in the corresponding quarter of last year.

Reacting to the company's fourth-quarter earnings, shares of IOCL jumped as much as 4% to ₹87.65 apiece on the National Stock Exchange (NSE). The government-owned fuel retailer's market capitalisation stood at ₹1.23 lakh crore.

The board of Indian Oil Corporation recommended a final dividend of 30% for the year 2022-23, which is ₹3 per equity, subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM) of the Company. The final dividend would be paid within 30 days from the date of the declaration at the AGM.

IOCL, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) together control around 90% of the fuel retailing network in India.

Marketing margins of fuel retailers recovered recently due to falling crude oil prices.

According to Moody's Investors Service, marketing margins will normalise only when the refining and marketing companies' net realised prices for petrol and diesel are allowed to freely align with international prices. "This will likely happen only in 2024 after the conclusion of general elections in India," the rating agency said earlier this year.

Even though petrol and diesel prices in India are deregulated, net realised prices for the state-owned refining and marketing companies have remained unchanged since April 2022 as the government sought to limit the effects of inflation on consumers. Moody's expects the OMCs' earnings to continue to improve over the next 12-18 months so long as crude oil and net realised prices for petrol and diesel remain at or near current levels.

Indian Oil Corporation, India's leading downstream company, specialises in oil refining and marketing and distribution of petroleum products, petrochemicals and natural gas. The company was 51.5% owned by the Indian government as of December 31, 2022. Through its 11 refineries, which have a combined capacity of 1.6 million barrels (bbl)/day, IOCL is the largest downstream oil company in India with a share of around 32% of the domestic refining capacity. It also has an extensive pipeline and retail network, petrochemical operations, and a gas distribution business.