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Published 20:48 IST, January 27th 2025

IOC Gains Market Share As Sales Surge; Why Is Q3 Profit Down?

IOC Director (Finance) said the decline in profit was mainly because of inventory and foreign exchange losses and a fall in product cracks.

Reported by: Republic Desk
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IOC
IOC | Image: Justdial

Indian Oil Corporation (IOC), the nation's biggest oil firm, on Monday reported a 64 per cent drop in its December quarter net profit as inventory and foreign exchange losses eroded gains from record fuel sales.

Standalone net profit was at Rs 2,873.53 crore in October-December 2024 - the third quarter of April 2024 to March 2025 fiscal year (FY25) - compared with Rs 8,063.69 crore earnings in the same period a year back, according to a stock exchange filing of the company.

Profit however surged quarter-on-quarter when compared to Rs 189.01 crore earnings in July-September 2024.

IOC Director (Finance) Anuj Jain said the decline in profit was mainly because of inventory and foreign exchange losses and a fall in product cracks.

The company had a Rs 7,800 crore inventory loss in the third quarter. Another Rs 1,900 crore was on account of forex losses.

Inventory loss is booked when a company buys oil at a particular price but by the time it is able to ship to India and process it, the prices would have fallen. And since the product prices are benchmarked to prevailing rates, inventory loss is accounted for. Inventory gains happen if the reverse happens.

Also, cracks - the difference between the cost of raw material (crude oil) and finished product price - dropped. For diesel it came down from USD 19.18 per barrel in October-December 2023 to USD 10.8 and that for petrol from USD 7.04 a barrel to USD 3.63 per barrel in October-December 2024, he said.

The firm also saw its refining margins fall in Q3. It earned USD 2.95 on turning every barrel of crude oil as against a gross refining margin of USD 13.53 per barrel in Q3 of the previous fiscal.

IOC chairman A.S, Sahney said the company posted its highest ever quarterly sale of 26.134 million tonnes, up 6.2 per cent over last year, as the company focussed on its core competence of fuel sales. Petrochemical volumes also rose 7 per cent while its gas trading volumes jumped 24 per cent in the quarter.

"IOC has done the highest ever sales of petroleum products... year on year it is a 6.2 per cent growth and quarter on quarter it is 13.8 per cent growth," the chairman said.

He said the company also gained market share - from 46.4 per cent in PSU sales in Q2 (July-September) to 46.7 per cent in Q3. In the industry as a whole (after taking into account private fuel retailers), IOC market share rose to 41.3 per cent in Q3 from 41.1 per cent in the preceding quarter, he said.

"We are going on a street to acquire new customers," he said, adding the size of the Indian market has grown but IOC has grown faster.

Sahney said the focus is back on core oil refining and marketing as well as petrochemical business as it is the main cash cow for the company.

IOC will continue to invest in renewables including green hydrogen and energy transition but the focus will be on core competence. "I am committed to achieving a net zero target by 2046," he said.

Revenue from operations declined to Rs 2.16 lakh crore in Q3 from Rs 2.23 lakh crore a year back as oil prices fell. For nine months ended December 31, 2024, IOC posted a net profit of Rs 5,696.72 crore on a revenue of Rs 6.31 lakh crore. This compared with a profit of Rs 34,781.15 crore on a revenue of Rs 6.49 lakh crore in the year ago period.

Of the 26.134 million tonnes of products sold in Q3, exports were 1.354 million tonnes - almost unchanged from last year. Domestic sales were 24.78 million tonnes in October-December 2024 as compared to 23.328 million tonnes a year back.

IOC refineries processed 18.11 million tonnes of crude oil in Q3, down from 18.5 million tonnes last year. 

Updated 20:49 IST, January 27th 2025