State-owned Indian Oil Corp (IOC) fell short of analysts' expectations in the first quarter of the financial year, as inventory losses weighed on its refining margins. Despite this, the company's standalone net profit more than doubled to Rs 56.89 billion Indian ($649.13 million) for the quarter that ended on June 30. Analysts had anticipated a profit of Rs 74.66 billion, according to data from LSEG.
IOC, which controls about a third of India's refining capacity alongside its unit Chennai Petroleum, reported a 1.2% increase in revenue from operations, reaching Rs 2.19 trillion during the quarter. The company's gross refining margin (GRM), which signifies the profit earned from refining one barrel of oil, dropped to $2.15 per barrel from $6.39 per barrel the previous year due to inventory losses impacting the GRM.
Despite challenges, there was a rise in fuel demand in India, the world's third-largest oil importer and consumer, during the quarter as the costs of crude oil declined. In comparison, peer companies such as HPCL and BPCL posted positive results earlier in the month, with HPCL benefiting from higher marketing margins and BPCL surpassing profit estimates on the back of lower costs and improved demand.
Analyst ratings indicate varying perspectives on the stock, with the average rating scaled from Strong Buy to Strong Sell. Additionally, the stock's performance in the April-June period, as reported by LSEG, highlights important data for investors to consider.
Indian Oil Corp's Q1 results demonstrate the challenges faced by the company in a volatile market environment, with inventory losses impacting its profits. The company's ability to navigate these challenges and capitalize on improving fuel demand will be closely monitored in the coming months as the energy sector continues to evolve.
