1. At a Glance
Indian Oil Corporation Ltd (IOCL) is that massive PSU elephant you keep spotting everywhere but never quite know what it’s doing at any given moment. At a market cap of ₹2.48 lakh crore and a current price hovering around ₹176, IOCL just reported a Q3 FY26 consolidated PAT of ₹13,502 crore, up a jaw-dropping 695% YoY. Yes, that number is not a typo, and no, it doesn’t mean life has suddenly become fair.
Sales for the quarter stood at ₹2,05,157 crore, with modest growth, but profits exploded thanks to refining margins doing yoga poses nobody expected. Stock P/E sits at ~6.9, dividend yield at 2.8%, ROCE at 7.36%, and debt-to-equity at 0.74. IOCL has also delivered ~39% returns over one year, which is ironic for a stock most people buy for dividends and forget about like an old landline phone.
But here’s the twist: IOCL is sitting on ₹2.5 lakh crore of ongoing capex, building refineries, pipelines, petrochemical units, hydrogen plants, EV charging stations, and probably a few things even the board doesn’t fully remember approving. So the real question is: is IOCL an undervalued cash machine or a government-controlled science experiment?
Let’s dig in.
2. Introduction
Indian Oil Corporation is not just a company; it’s a national utility with a balance sheet. From the diesel in your truck to the LPG cylinder in your kitchen, IOCL is basically the middleman between crude oil and Indian survival.
Controlled by the Government of India with 51.5% promoter holding, IOCL operates across refining, pipelines, marketing, gas, petrochemicals, explosives, EV charging, hydrogen, and renewables. In simpler terms, if it burns, flows, or gets subsidised, IOCL probably has a hand in it.
Over the last decade, IOCL’s story has oscillated between:
- “Amazing scale, terrible
- margins”
- “Government interference, dividend generosity”
- “Capex-heavy, but strategically critical”
FY24 and FY25 have been particularly wild. Refinery utilisation crossed 105%, profits rebounded sharply, and suddenly this boring PSU started showing up on momentum screens. Naturally, retail investors got confused. Should you treat IOCL like a bond with mood swings or a cyclical earnings monster trading at single-digit multiples?
Before we answer that, let’s understand what IOCL actually does.
3. Business Model – WTF Do They Even Do?
Think of IOCL as India’s energy backbone with a petrol pump logo.
Petroleum Products (94% of revenue)
This is the big daddy. IOCL controls 42% market share in petroleum products with 60,900+ touchpoints and 11 refineries. Total refining capacity stands at 80.8 MMTPA, which is 31% of India’s total capacity.
In FY24:
- Crude throughput: 73 MMT
- Capacity utilisation: 105%
- Segment revenue growth (FY22–FY24): 19%
Basically, IOCL squeezes every drop of productivity out of its refineries like a hostel student squeezing toothpaste at month-end.
Petrochemicals (3%)
Second-largest domestic player with 4.4 MMTPA capacity. Volumes grew, but revenues declined 5% between FY22 and FY24 because petrochem margins globally have been in ICU.
IOCL wants to increase petrochemical intensity from 6.1% to 15% by 2030,
