Top Indian Refiner’s Profit Rises as High Margins Soak Cost Jump
IOC posted a better-than-expected rise in Q2 profit as expanding margins on fuels and stockpile gains offset the jump in costs.
(Bloomberg) -- Indian Oil Corp., the nation’s largest refiner, posted a better-than-expected rise in quarterly profit as expanding margins on fuels and stockpile gains offset the jump in costs.
Net income in the three months ended Sept. 30 rose 2.1% to 63.6 billion rupees ($849.4 million), the New Delhi-based company said in an exchange filing Saturday. That beat the average 45.6 billion rupee-profit estimated by a Bloomberg survey of analysts.
Revenue increased 47% to 1.7 trillion rupees while total costs jumped by 49% to 1.63 trillion rupees. Raw material costs doubled during the quarter.
While refiners globally are enjoying hefty margins as economies and offices reopen and spur fuel demand, some of these gains are being eroded by surging input prices. The Indian refiner also benefited from gain in crude oil and fuel prices that inflated the value of its stockpile, leading to inventory gains.
Crude oil in New York averaged $70.56 a barrel in the first quarter compared with $40.96 a barrel a year earlier. Alongside, profits from converting oil into diesel have also surged and were at the highest since January 2020 in Asia. Expensive crude and pick up in fuel demand have led to soaring prices for gasoline and liquefied petroleum gas.
Indian Oil’s refining margins, or earnings from processing oil, during April-September rose to $6.57 a barrel from $3.46 a year earlier. It didn’t provide refining margins for the September quarter.
India’s biggest fuel retailer sold 7% more petroleum products during the September quarter as energy consumption rebounded after the country eased pandemic-related movement curbs and allowed malls and markets to reopen.
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