Indian Oil Corporation (IOC) reported 99 per cent drop in standalone net profit for the second quarter ending September 2024, with earnings falling to Rs 180 crore from Rs 12,967 crore in the same period last year.
The decline came as revenue from operations fell 4 per cent year-on-year (YoY) to Rs 1.95 lakh crore, down from Rs 2.02 lakh crore in the previous year. On a sequential basis, IOC’s net profit dropped 93 per cent from Rs 2,643 crore reported in the June quarter, while revenue decreased by 10 per cent.
The company faced mounting cost pressures, with total expenses rising to Rs 1.97 lakh crore, an increase from Rs 1.86 lakh crore in the corresponding quarter of last year. The EBITDA for the July-September period stood at Rs 3,773 crore, translating to a modest EBITDA margin of 2.17 per cent. A critical factor behind this performance was the dip in the company’s gross refining margin (GRM), which averaged USD 4.08 per barrel from April to September, a steep fall from USD 13.12 per barrel in the same period a year ago. Adjusting for inventory effects, the core GRM was even lower at USD 2.97 per barrel, reflecting the challenging market conditions.
Demand for fuel in India, the world’s third-largest oil importer, took a hit during the four-month monsoon season that began in June, with flooding in several regions impacting mobility and reducing fuel consumption. The seasonal slowdown in fuel demand saw India’s fuel usage drop year-on-year in August and September, hitting a two-year low by the end of the quarter. Compounding these challenges, global crude oil prices fell by nearly 17 per cent during the quarter, adding further strain to IOC’s margins.
The company’s consolidated results also pointed to the impact of these unfavorable conditions, with IOC posting a net loss of Rs 449 crore for the quarter compared to a profit of Rs 13,713 crore in the same quarter last year.