Indian Oil Q3FY25 Earnings Miss Drags Shares as Margins Disappoint
Indian Oil Corporation (IOC) reported a lower than expected performance in Q3FY25 earnings whereby its shares slid. The state-owned oil refiner’s performance was disappointing as earnings and EBITDA margins were below expectation , and a modest improvement in gross refining margins.
Revenue Growth Falls Short of Expectations
Indian Oil recorded a total revenue of ₹1.94 lakh crore in the December quarter, which was 11% higher than in the previous quarter. Nevertheless, the number surpassed the CNBC-TV18 poll estimate of ₹1.92 lakh crore. Despite increased revenue, net profit fell to ₹2,874 crore, which was a far cry from the market’s estimate of ₹6,140 crore.
The company’s profitability was partially supported by a one-off gain of ₹680 crore, compared with ₹1,157 crore for the same period last year. However, this gain was not enough to annul the overall drag on the earnings. Other income increased by 37% to ₹1,882 crore, from ₹1,375 crore in the last quarter, which eased the profit decline slightly.
EBITDA Margins Remain Pressured
Indian Oil’s Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) was ₹7,116 crore, 50% less than CNBC-TV18’s estimate of ₹13,078 crore. For the same period net EBITDA margins were at 3.7%, below the market expectation of 6.8%. Margins were slightly lower in the previous quarter at 2.2%.
The company’s Gross Refining Margins (GRMs) were $3.69 per barrel in the quarter, which was far below the market estimate of $6.2 per barrel. GRMs were a major issue that affected the earnings of Indian Oil, which pointed to the general problems of the refining business.
Operational Highlights and Market Impact
Nevertheless, Indian Oil posted a 13% growth in marketing sales and a 6% improvement yearly. Refinery throughput increased by 8% from the previous quarter and was 2% below the level of the corresponding quarter of the previous year. The recoveries of LPG for the first nine months of FY25 were at ₹14,325 crore, which shows that the pressure of subsidy is still persisting.
At press time, the shares of Indian Oil were at ₹123.5 which was 3.7% lower than the day’s opening and 37% less than its recent high of ₹196. Some of the market analysts are closely observing the stock price which has been affected by the earnings miss and the company’s margin pressure.
