Indian Oil Q2 Results: Profit Up 7% Aided By Other Income
The performance is supported by higher demand for petroleum products post lifting of COVID-related lockdown restrictions.
Indian Oil reported an increase in its net profit in the September quarter due to improvement in revenue growth and a significant jump in other income.
Net profit stood at Rs 6,360.05 crore, according to an exchange filing. That compares with a Rs 3,057.7 crore consensus estimate of analysts tracked by Bloomberg.
Revenue (minus excise duty) rose 14.1% quarter on quarter to Rs 1,35,417.8 crore. Analysts had pegged revenue at Rs 1,24,400 crore.
Indian Oil Q2 Results 2021-22, key highlights (quarter-on-quarter):
Operating profit down 4.5% at Rs 10,268.1 crore.
Other income up 2.5x at Rs 1,433.72 crore.
Operating margin contracts to 7.8% vs 9.4% (QoQ).
Total expenditure up 10.2% to Rs 1,62,834.14 crore.
Gross refining margin—what a company earns by converting one barrel of crude into fuel—at an average of $6.57/barrel between April and September 2021.
The company’s performance was supported by higher demand for petroleum products after the lifting of Covid-related lockdown restrictions. Domestic sales grew 1.1% quarter-on-quarter to 18.94 million metric tonnes. However, refinery throughput fell 8.6% QoQ to 15.28 MMT.
India’s consumption of petroleum products grew 2.5% QoQ to 48.42 MMT in Q2FY22 with petrol and aviation turbine fuel consumption growing at 17% and 18% QoQ, to 7.9 MMT and 1.1 MMT, respectively, in the second quarter. However, diesel consumption declined 6.3% QoQ to 17.3 MMT, according to PPAC data.
Increase in benchmark GRMs and improved product spreads support the company refining performance. The benchmark Singapore GRMs rose 76% sequentially from $2.1/barrel in Q1FY22 to $3.7/barrel in Q2FY22. Petrol, diesel, and jet fuel spreads have jumped 20%, 2%, and 16% on a sequential basis in the second quarter of FY22.
The increase in crude oil prices over the quarter create prompted inventory gains. Brent crude averaged $73.2/barrel in Q2FY22, higher by 5.9% QoQ.
Key petrochemical naphtha spreads of polyethylene, polypropylene and polyvinyl chloride naphtha have contracted between 25-30% QoQ in the second quarter compared to a growth of 6-23% in the first quarter of FY22.
The average marketing margins on petrol and diesel increased in Q2FY22, supported by retail price hikes. The prices of petrol and diesel were increased by 2.9% and 0.9% between July 1, 2021 and Sept. 30, 2021, compared to an increase of 3.5% in the price of Brent crude.
The company's board has declared an interim dividend of Rs 5 per equity share of face value of Rs 10 each and fixed 12 November 2021 as the record date.