IOC Q4 Results: Profit Rises 79% On Lower Tax Expense

Indian Oil Corp.'s quarterly profit rose surpassing estimates on the back of lower tax expenses.

Net profit of the oil retailer increased 78.6% sequentially to Rs 8,781 crore in the three months ended March, according to its exchange filing. That compares with the Rs 4,721-crore consensus estimate of analysts tracked by Bloomberg.

Tax expenses declined 24.6% over the previous quarter. Revenue growth outpaced 9.8% growth in total expenditure, contributing to higher profit.

Q4 Highlights (QoQ)

• Revenue rose 16.3% to Rs 1.24 lakh crore, against the forecast of Rs 1.3 lakh crore.

• Operating profit rose 40.3% to Rs 13,502 crore.

• Other income declined 13.2% to Rs 1,102 crore.

• Operating margin expanded to 10.9% from 9%.

Indian Oil's fourth-quarter gross refining margin—what a company earns by processing a barrel of crude into fuel—was not available. The benchmark Singapore gross refining margin, however, recovered from $1.2 a barrel in the third quarter to $1.8 per barrel in the January-March period.

For the full fiscal, Indian Oil's GRM stood at $5.64 a barrel in against $0.08 in FY20.

Rising benchmark GRM and an improved petrol spread supported refining margins of the oil marketer in the fourth quarter. Besides, a strong pent-up demand and tighter supply helped key polymer spreads reach multi-quarter highs.

Diesel cracks—difference between crude oil and product price—have lagged petrol cracks in the past few months amid uncertainty in diesel demand recovery.

The average Brent crude price rose to $60.7 a barrel in the fourth quarter from $44.6 in the preceding three months. But Indian Oil’s marketing margin—what it earn by selling every litre of fuel—fell as retail prices were left unchanged ahead of the recent state elections.

Petroleum product segment grew 11.9% sequentially, while petrochemicals business grew 15.8%.

Shares of Indian Oil rose as much as 1.6% after the results were announced compared with a 0.44% fall in the benchmark Nifty 50.