01 — At a Glance
₹238k Crore Behemoth That Lost ₹449 Cr in Q2, Then Made ₹13,502 Cr in Q3
- 52-Week High / Low₹189 / ₹120
- Q3 FY26 Revenue₹2,05,157 Cr
- Q3 FY26 PAT₹13,502 Cr
- Q3 EPS (₹)₹9.21
- Annualised EPS (Q3×4)₹36.84
- Book Value₹140
- Price to Book1.21x
- Dividend Yield4.15%
- Debt / Equity0.74x
- Return (12-month)+35.1%
Auditor’s Opening Note: Indian Oil spent nine months running its refineries at 105% capacity utilisation, pumping crude like there’s no tomorrow, and then Q3 hit. Revenue grew 5.74% QoQ to ₹2,05,157 crore. PAT exploded 695% QoQ to ₹13,502 crore because November crude prices crumbled like a failed startup pitch. The stock is priced at 6.66x P/E — which is cheaper than a vada pav stand in Mumbai but with infinitely more complexity. P/E 35% below the industry median of 13.5x. Either the market knows something genius, or it’s smoking something the government just legalised. Let’s find out.
02 — Introduction
The Refinery That Everyone Forgets Exists Until The News Mentions It
Indian Oil Corporation. IOC. The Maharatna. The company whose existence your English class textbook confirmed in 2003 as “a leading public sector enterprise.” Since then, absolutely nothing exciting has happened in marketing terms, but operationally? It’s been an absolute beast.
IOC owns 11 refineries. Total capacity: 80.80 million metric tonnes per annum. That’s 31% of India’s entire refining capacity. It runs 19,500 km of pipelines. It controls 42% of the petroleum retail network. It’s the second-largest natural gas player, has a petrochemical arm, runs bulk explosives plants, and now manufactures EV charging stations. And yet, somehow, it’s priced at a 50% discount to the energy sector median P/E. Even Reliance — a company that makes everything from polyester to oil to jio sim cards — trades at 3.7x the P/E of IOC. Make that make sense.
Q3 FY26 results dropped, and the story is vintage IOC: Refinery throughput at 109.7% capacity utilisation. Operating profit bounced back from October’s catastrophe. PAT hit ₹13,502 crore, an absolutely mental 695% jump from Q2’s ₹1,50 crore loss. EPS annualised to ₹36.84, which means if the company keeps printing Q3-like quarters, investors are buying this at a 5.5x multiple on “normal” earnings. That’s the discount we’re obsessing over today.
Government Stake Note: 51.5% owned by the President of India (read: the government). 14.2% by ONGC. 5.16% by Oil India. So 71% is effectively government. Which means shareholders are paying for a company that’s already essentially nationalised, trading at the price of a bankrupt airline, with the operating margins of a company that actually knows what it’s doing. Cognitive dissonance much?
03 — Business Model: From Crude to Chaos
Buy Crude Oil. Boil It. Sell Fuel. Repeat. Then Cry About Margins.
IOC’s business is the most straightforward value-destructive cycle in Indian industry: import crude oil at fluctuating global prices, refine it into petrol, diesel, LPG, jet fuel, and lubricants, then sell it at government-controlled prices with razor-thin margins. The retail network of 37,472 outlets across the country means you can’t go 2 km without seeing the IOC peacock logo. But in the world of investing, distribution reach ≠ margin expansion. IOC is literally the operator of India’s petroleum supply chain with handcuffs on pricing.
Nine months of FY26 show the story: Petroleum products (94% of revenue) grew at 5% in segment revenue. Petrochemicals (3% of revenue) are struggling with margin compression — revenue actually declined 5% from FY22 to FY24 even as volumes grew. Natural Gas business is growing but still small. The whole thing runs on refinery capacity utilisation and crude-product spreads (what oil traders call the GRM — Gross Refining Margin). When crude crashes, GRM improves, PAT explodes. When crude surges, GRM tightens, shareholders cry.
Refinery Capacity80.8 MMTPA31% of India
Pipeline Network19,500 kmWorld’s Largest
Retail Outlets37,472Petroleum+CNG
Market Share42%Petroleum POL
The Margin Prison: Q3 FY26 saw 11% OPM (operating profit margin). Nine-month average is 7.6%. Management’s best-case scenario across the full year might be 9–10%. Compare to a typical consumer goods company at 15–18%, or a software company at 20%. IOC operates in the 7–11% margin band because (a) it’s a refiner, (b) it’s price-controlled, and (c) the government prioritises “cheap fuel for voters” over “shareholder returns.” Love that for them.
💬 Do you think the government will ever let IOC raise margins, or is this margin prison a permanent feature? Drop your thoughts!
04 — Financials Overview
Q3 FY26: The Numbers That Shocked Nobody (Except Q2)
Result type: Quarterly Results (9-Month Disclosure) | Q3 FY26 EPS: ₹9.21 | Annualised EPS (Q3×4): ₹36.84 | Nine-month FY26 EPS: ₹25.33
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 2,05,157 | 1,94,014 | 1,78,628 | +5.74% | +14.8% |
| Operating Profit | 22,745 | 7,573 | 16,245 | +200.5% | +40.0% |
| OPM % | 11% | 4% | 9% | +700 bps | +200 bps |
| PAT | 13,502 | 1,936 | -449 | +597.3% | N/A (loss→profit) |
| EPS (₹) | 9.21 | 1.35 | -0.31 | +582% | +2,974% |
WTF Q2 Was: October 2025 was a refinery graveyard. Crude prices spiked. Margins turned negative. The GRM was essentially zero. And Q2 FY26 (a 3-month period) turned into a loss-making disaster with -₹449 crore PAT. But then November happened. Crude crashed. GRM exploded. Q3 came and hit ₹13,502 crore PAT. That’s not a business working harder. That’s a commodity trader’s calendar crossed with a refinery operator. Volatility is the feature, not a bug.
05 — Valuation: Is the Discount Real or Stupid?
₹169 Stock Priced Like A Failed Bakery, Valued Like A Sovereign Mint
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