Indian Oil Corporation (IOC) reported a 52 per cent drop in net profit for the March quarter (Q4 FY24) to ₹4,837.69 crore, despite achieving a record annual profit of ₹39,618.84 crore for the full fiscal year 2023-24.
The significant drop in Q4 profit stemmed from multiple factors, including losses in the petrochemical segment, shrinking refining margins and a pre-election fuel price cut that squeezed margins amid rising crude oil costs.
IOC also shouldered uncompensated losses of ₹1,017 crore for selling domestic cooking gas (LPG) below cost during the quarter.
The stock dropped 4.44 per cent to settle at ₹168.95 apiece on the BSE. During the day, it tanked 4.97 per cent to ₹168.
IOC’s revenue for Q4 dipped to ₹2.21 lakh crore compared with ₹2.28 lakh crore a year ago. Fuel sales volume for the full fiscal year increased to 92.31 million tonnes from 90.65 million tonnes. The company’s gross refining margin declined to $12.05 per barrel in FY24 compared with $19.52 in FY23. IOC declared a final dividend of ₹7 per share for FY24.
In 2022, state-owned fuel retailers IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) froze prices despite a spike in global oil prices following Russia’s invasion of Ukraine. This was with a view to insulating consumers from price volatility.
The price freeze led to the three firms incurring losses in the first half of the 2022-23 fiscal (April 2022 to March 2023). IOC incurred a loss of ₹2,264.88 crore in April-September 2022. In 2023-24, oil prices declined and the freeze meant that companies booked profits. The three firms in the first nine months of the fiscal, posted profits that were more than their previous highest-ever net profit.
It was only in mid-March that petrol and diesel prices were cut by ₹2. The rate cut, which came just before the general elections, happened when crude oil prices started inching up. Pre-price cut, breakeven on petrol and diesel was at a crude price of $73-74 per barrel. However, the basket of crude oil that India imports has averaged $ 89.52 per barrel this month.
The company sold 23.73 million tonnes of petroleum products in the quarter, up from 22.95 million tonnes a year back and 23.32 million tonnes in the preceding quarter.
