Indian Oil posts sharp Q3 FY26 profit rebound on refining recovery and LPG support

New Delhi: Indian Oil Corporation Ltd (IOCL) reported a sharp recovery in profitability in the December quarter of FY26, reflecting a turnaround from both the preceding quarter and the year-ago period as operating conditions improved materially. On a standalone basis, the company posted a net profit of Rs 12,125.86 crore in Q3 FY26, compared with Rs 7,610.24 crore in Q2 FY26 and Rs 2,874.93 crore in Q3 FY25. Consolidated net profit for the quarter stood at Rs 13,502.26 crore, up from Rs 8,191.06 crore in the previous quarter and Rs 2,147.54 crore a year earlier.

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The scale of the year-on-year jump highlights how sharply earnings rebounded once margins normalised.

Revenue growth modest; margin expansion drives earnings

Standalone revenue from operations rose to Rs 2,31,769.04 crore in Q3 FY26 from Rs 2,03,002.13 crore in the September quarter and Rs 2,16,509.62 crore in the year-ago period. On a consolidated basis, revenue from operations increased to Rs 2,36,257.24 crore, compared with Rs 2,06,502.03 crore in Q2 FY26 and Rs 2,19,564.55 crore in Q3 FY25.

While revenue growth remained steady on both a sequential and annual basis, the much sharper rise in profits indicates that the quarter was driven primarily by margin recovery rather than a surge in sales volumes alone.

Refining margins anchor the turnaround

A key driver of the earnings rebound was the improvement in refining economics. For the nine months ended December 2025, Indian Oil reported an average gross refining margin of USD 8.41 per barrel, with the current-price GRM at USD 9.86 per barrel.

This recovery in margins translated into a sharp improvement in profitability for the petroleum products segment during the quarter, significantly lifting overall operating performance.

LPG compensation lifts reported numbers

The December quarter also benefited from the recognition of government compensation for domestic LPG under-recoveries. Indian Oil recognised Rs 2,414.34 crore during Q3 FY26 towards LPG compensation for November and December 2025.

Despite this support, the company reported a cumulative net negative LPG buffer of Rs 24,318.60 crore as on December 31, 2025, indicating that under-recoveries remain a material consideration for future earnings.

Throughput and sales improve sequentially

Operational metrics strengthened sequentially in the quarter. Domestic product sales rose to 26.02 Million Metric Tonnes (MMT) in Q3 FY26 from 22.85 MMT in the previous quarter, while refinery throughput increased to 19.43 MMT from 17.61 MMT. Pipeline throughput also climbed to 27.56 MMT in the December quarter, up from 24.10 MMT in Q2 FY26.

Higher throughput amplified the benefit of improved refining margins, reinforcing the profit recovery.

Consolidated results outperform standalone

The consolidated performance exceeded standalone results, reflecting positive contributions from subsidiaries, associates and joint ventures. While standalone net profit was Rs 12,125.86 crore, consolidated profit attributable to equity shareholders stood at Rs 13,006.92 crore.

The company also reported a share of profit from associates and joint ventures of Rs 466.51 crore, while profit attributable to non-controlling interests amounted to Rs 495.34 crore during the quarter.

Segment performance underscores refining dependence

Segment-wise, petroleum products overwhelmingly drove earnings in Q3 FY26. On a consolidated basis, petroleum products revenue stood at Rs 2,21,309.62 crore, while segment profit surged to Rs 18,141.95 crore, sharply higher than both the previous quarter and the year-ago period.

Petrochemicals remained under pressure, with revenue of Rs 6,935.77 crore but a segment loss of Rs 361.51 crore, continuing to weigh on overall performance. The gas segment generated revenue of Rs 11,690.82 crore and posted a segment profit of Rs 596.45 crore, showing a strong sequential improvement. Other business activities contributed revenue of Rs 1,499.57 crore and a segment profit of Rs 201.50 crore.

The data shows that Indian Oil’s earnings rebound in Q3 was almost entirely anchored in petroleum products, with petrochemicals acting as a drag and gas providing incremental support.

Margins and earnings metrics strengthen

Improved operating conditions were reflected in margin expansion across the board. Consolidated operating margin rose to 7.94 percent in Q3 FY26 from 6.17 percent in the previous quarter, while standalone operating margin improved to 7.23 percent from 5.28 percent.

Net profit margins also expanded meaningfully, with consolidated net margin at 5.72 percent and standalone net margin at 5.23 percent. Standalone basic earnings per share for the quarter stood at Rs 8.81, while consolidated basic EPS was Rs 9.44.

What the quarter tells investors

Indian Oil’s Q3 FY26 results mark a clear cyclical recovery, driven by stronger refining margins, government support for LPG and improved operational throughput. However, persistent petrochemical losses and the size of the residual LPG under-recovery buffer suggest that earnings will remain sensitive to margin cycles and policy decisions in the coming quarters.

For now, the December quarter underscores how decisively Indian Oil’s financial performance can rebound when refining economics turn favourable.

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