Ladies and gentlemen, good day and welcome to the Indian Oil Corporation Limited's Q1 FY 2026 Results Conference Call hosted by Antique Stock Broking Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stock Broking Ltd. Thank you and all the user.
Thank you, Zico, and a very good morning to everyone. I would like to welcome all the participants to this 1Q FY 2026 Indian Oil Quarter Conference Call. We have with us the management represented by Mr. Anuj Jain, Director of Finance, Mr. Nitin Kumar, CGM , Corporate Finance and Treasury, Mr. Pramod Jain, CGM , Treasury, and Mr. Prabhat Himatsingka, CGM , Finance and Treasury. I will hand over the call to Mr. Anuj Jain for his opening remarks, and then we can move to Q&A. Mr. Anuj Jain, your turn.
Thank you. Dear listeners and analysts, a very good morning to all of you. I take this opportunity to welcome all of you to the conference call organized by us for the announcement of the first quarter's results of financial year 2025-2026. I thank each one of you for joining the call. I trust you have had an opportunity to review the accounts we have posted on our website and the updates that have been shared with most of you. In today's call, we would like to walk you through our performance for the quarter gone, providing some insights on the broader macroeconomic context and also share with you the strategic initiatives we are pursuing to strengthen our position as India's largest oil and refining and marketing company. Friends, let me start with our quarterly performance.
This quarter, we have registered a profit after tax of INR 5,689 crores, which was INR 7,265 crores in the preceding quarter and INR 2,643 crores in the corresponding quarter of financial year 2025. The decline from the last quarter was primarily on account of inventory losses, which we are going to discuss further. Revenue from operations during this quarter stood at INR 218,608 crores. This marked an increase from INR 217,725 crores in Q4 of financial year 2024-2025 and from INR 215,989 crores in the preceding and the corresponding quarter of financial year 2024-2025. On August 2025, the union cabinet handed a full compensation amounting to INR 30,000 crores to the three public sector oil marketing companies, Indian Oil , BPC and HPC for the under-recovery incurred on sale of domestic LPG.
We are yet to receive an official communication in this regard for further details and accounting, and more on the same was given in the submission of the results also. I am pleased to share our operational performance this quarter has been robust, surpassing several key benchmarks of previous quarters. Our sales for the quarter were highest ever, and many other operational achievements were made. This is a testament to the strength of our operating model, the agility of our teams, and the efficiency of our extensive distribution network. Friends, now the operational and financial highlights will be reviewed by my colleague, Mr. Nitin Kumar, CGM , Corporate Finance and Treasury. Over to you, Nitin.
Thank you, sir. Good morning to you all. Kindly note that today's discussion may include forward- looking statements. We have based on currently available information, assumptions, and expectations and are subject to uncertainties that could cause actual results, performance, or achievements to differ materially from those experts we employed. Participants are advised to refer to companies' latest filings with regulatory authorities for a more detailed discussion on the risk and uncertainty. The past quarter has witnessed important developments both globally and domestically. On the interest rate front, the U.S. Federal Reserve has maintained the federal fund rate in the range of 4.25%- 4.5% through July 2025, reflecting the Fed's cautious approach amidst persistent uncertainty in inflation and growth outlook. In India, the Reserve Bank of India reduced the benchmark repo rate to 5.5% in May 2025, representing a cumulative cut of 100 basis points over the last six months.
On the growth front, reaffirming India's position as the world's fastest growing major economy, IMF has revised its forecasts for India's economic growth to 6.4% for both 2025 and 2026. RBI has maintained its estimate of 6.5% for financial year 2025. S&P Global Ratings has upgraded India's government rating to BB B, underscoring the nation's strong fundamentals and resilient growth. This strengthens investor confidence and supports better financing conditions for Indian corporates, including our own growth plans. For our sector, demand dynamics remain strong. As per PPAC data, India's domestic consumption of petroleum products reached 61.65 million metric tons in the last quarter of financial year 2025-2026 versus 60.5 MMT in the preceding quarter, marking a growth of 2%. This uptick was led by a sharp rise in diesel and gasoline consumption. For the current financial year, PPAC forecasts 4.65% growth in domestic consumption of petroleum products.
This continued expansion reinforces India's role as a key driver of global oil demand in 2025. As the country's largest oil refiner and marketer, we remain steadfast in our mission to ensure energy availability across the nation at affordable costs. Looking ahead, we have set ourselves the goal of increasing our share of the national energy market from 9% today to 12.5% by 2050. This is aligned with the expected doubling of India's overall energy demand by mid-cycle. To achieve this, we are pursuing a balanced portfolio approach, continuing to strengthen our conventional fuel business while making decisive moves into cleaner and more sustainable energy pathways. Our three major refineries' expansion projects are progressing well and are on track for mechanical completion by 2026.
With these expansions, our group refining capacity will increase from 80.8 million metric tons per annum to 98 million metric tons per annum, providing a critical boost to our ability to meet growing national demand and support India's vision of energy survival. In parallel, we are investing in pipeline and marketing infrastructure to further fortify our supply and distribution network, ensuring that energy reaches every corner of the country efficiently. We are simultaneously scaling up our petrochemical capacity, as this remains a high potential growth area given India's low per capita consumption and significant import dependence. Our objective is to raise petrochemical integration from the present 6% to 15% with a focus on niche and special chemical products.
On the clean energy front, we are scaling up investments in electric mobility infrastructure, including EV charging stations and battery swapping stations, alongside projects in natural gas, compressed biogas, biofuels, and green hydrogen, including hydrogen mobility solutions. Thus, we anticipate a gradual tapering of the spend on conventional assets with a growing share of our CapEx being directed towards petrochemicals and alternate energy segments, areas where we are making high conviction strategic investments for the future. We have begun the new fiscal year with the current strategic thrust, with the launch of Project Sprint, which is our transformational roadmap to not only sustain but also accelerate our leadership in the energy sector. Sprint represents the confluence of six strategic pillars: extension of core business, cost leadership, customer centricity, cutting-edge technology and innovation, the development of the next generation of leadership, and readiness for the energy transition.
The idea is to move decisively beyond business as usual and position Indian Oil to reach greater heights while reinforcing our core strengths. Now, let me briefly touch upon the quarterly performance highlights. Talking about a few numbers, friends, the average price of crude in the Indian market during this quarter witnessed a reduction of about 12.4% from the immediately preceding quarter, that is Q4 of financial year 2025. Various geopolitical factors, starting from OPEC+ production adjustments and imposition of tariffs by the U.S. government, have contributed in cooling the crude oil prices. With respect to the frag spreads during Q1 of FY 2025-2026, both MS and HSD frags have improved in comparison to this previous quarter. In the petrochemical space, the spreads of key products have showed a marginal improvement during the quarter, though they continue to remain at subdued levels.
A weak global economic outlook, coupled with the addition of new capacities, continues to exert pressure on petrochemical prices worldwide. Now, let me briefly touch upon the major verticals, refineries. I believe you all would have gone through the operational performance highlights updated on our website. The reported GRM of $2.5 per barrel during this quarter is lower than the previous quarter, mainly due to inventory losses. However, the normalized GRM for the quarter at $6.91 per barrel is better than the previous quarter of $5.39 per barrel. This increase in GRM is attributable to the higher product frag spread during the quarter. Pipelines, the capacity utilization was about 74% during this quarter, as compared to 73% in the previous quarter. Pipeline throughput during the quarter is 26.3 million metric tons, resulting in 25.8 million metric tons during the previous quarter.
Marketing, during the quarter, Indian Oil achieved the highest ever total quarterly sale of 26.328 million metric tons. During the quarter, 445 retail outlets were commissioned, taking the total number of outlets to 40,666. During financial year 2025, we plan to set up more than 4,000 retail outlets. Petrochemicals, the sale of petrochemical products, including exports, during this quarter was 0.83 million metric tons, similar to the preceding quarter, similar to the previous quarter amounting to 0.83 million metric tons. During the quarter, we registered natural gas sales of 1,644 TMT, that is 1,000 metric tons, and CGD sales of 41 TMT, as compared to natural gas sales of 1,787 TMT and CGD sales of 34 TMT during the preceding quarter, that is Q4 of financial year 2024-2025.
We have entered into a long-term sales and purchase agreement with ADNOC for supply of 1 million metric tons per annum of LNG over a 15-year period, starting from 2028. Indian Oil and Trafigura Private Limited signed a confirmation memorandum for the supply of approximately 0.4 million metric tons per annum LNG from July 2025 to December 2029, under Indian Oil's first Henry Hub linked mid-term contract. The first LNG cargo delivered on 10th August 20 25, at Dahej . These are major steps towards enhancing India's energy security and reducing exposure to the volatility of spot energy markets. We have marked several technological and operational milestones this quarter. We have recently signed a landmark contract and hydrogen purchase agreement with L&T Green Energy Technology Limited for the establishment of 10 KtPA green hydrogen generation units at our Panipat refinery.
The expected completion time of the project is around two years. Indian Oil's wholly owned green subsidiary, Terra Clean Limited , has secured ISTS with connectivity of 1,354 MW of electric capacity across India. Land procurement activities are in progress. Our Panipat refinery has become the first in the country to be certified to produce sustainable aviation fuel by converting used cooking oil into jet-grade fuel, a milestone in India's green aviation efforts and our broader sustainability journey. CapEx, during the quarter, the company incurred a total CapEx of INR 6,270 crores, encompassing investment across all verticals. For financial year 2025-2026, the budgeted CapEx is INR 33,494 crores. These investments are aligned with our long-term strategic roadmap and national energy priorities.
Borrowings, with respect to the borrowing levels, the borrowing as of 30th June, 2025 has decreased by about INR 13,000 crores and is at INR 121,545 crores levels, as compared to INR 134,466 crores as of 31st March, 2025. The decrease in the borrowing was mainly on account of year-end excise duty payments. With the current debt-to-equity ratio of 0.66 as of June 30th, 2025, Indian Oil is comfortably placed to fund the ongoing CapEx plans. Let me take a pause here and request the actual finance for his further remarks.
Thank you, Nitin. As we progress through financial year 2025-2026, our gravity remains firmly anchored in operational excellence, disciplined capital allocation, and strategic investments that not only reinforce our core strengths but also position us at the forefront of the evolving energy landscape. I extend my sincere gratitude to our shareholders, employees, partners, and all stakeholders for their unwavering trust and support. With a strong foundation, we are confident in our ability to deliver sustainable value and long-term growth, even in the face of a dynamic and challenging external environment. I will end my briefing here. We will now take your questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question for today comes from Probal Sen with ICICI Securities. Please go ahead.
Thank you for the opportunity for comments. Thank you, Mr. Mumble. I just wanted to understand how much investment included in this process is quarter and what sort of discount. Obviously, we have everyone see the wording mentioned here on the first. I just wanted to get your sense on the number of supplies.
See, as far as 2024-2025 was concerned, we almost put 22% Russian crude oil, which in quarter one, it got increased to 24%. In July, and this quarter is still going on. The discounts, as usual, everybody has said the same thing. It is in the range of around $1.5 to the Dubai benchmark.
Got it. Sir, just the other thing again, that was just to corroborate the industry impact. This quarter was because we had actually delta power code positioning, keeping in mind the geopolitical uncertainty. Is there anything else that we should be looking at because of the high energy market?
I would say inventory levels are being maintained based on our shutdown schedules and other requirements. This quarter, whenever you see, Indian Oil maintained quite high inventory because of our Haldia refinery. Whenever the crude oil prices come down, we take an impact on our financial statements. If you see, because this question will be asked by others also, this quarter, we had an inventory loss of almost INR 6,500 crores. Whereas if you see the Q4 last year, we had a gain.
The loss of INR 10,000 crores was less.
Primarily, just to sort of understand it, essentially, this was related to our building of positions based on our shutdown schedule, not because of any other reason. That's the reason why we got it.
Not because of other reasons.
It is all normal inventory. We have been maintaining under normal inventory in our booked-up accounts.
Understood. One more question if I can just slip in with respect to the targets, the two targets that you have mentioned. Correct me if I got the numbers wrong. One was our goal of increasing share in Indian energy from 9% t o 12.5%. The second one is purchasing yield in our overall portfolio around 6% to 15%. I just wanted to understand the roadmap for getting there and the timeline. I'm sorry if I missed that in the briefing. What are the timelines for achieving these two targets?
See, as far as the increasing of energy market shares from 12.5%, it is by 2050. That was a major target set by the company. As you see, apart from our traditional refining and marketing business, we are also venting big into the petroleum sector. We are also venting into the renewable sector. We are also venting into all types of energy with our CBG, gas, CNG. All these factors put together, we have an ambitious target of high CapEx. Definitely, based on the outcome of the editorial investments, we hope that we will be at around 12.5% of the total energy market in the country.
Right. About the petrochem share curve, that's the same target, 6%- 15% by CY 2050, or that is an earlier target?
No, that will be somewhere around, I think it was 2030 plus/ minus one or two years. This target should be achieved much before that. Because if you have seen, apart from my existing in petchem , we have also announced a big investment of almost $1 billion in the dual-feed naphtha cracker at Paradip Refinery. That target is also part of it.
Got it. Sir, one last housekeeping question. I didn't quite catch the last number shared by the occasional briefing. What is the debt-to-equity ratio that was mentioned?
0.6.
0.66
0.6.
What is the kind of peak debt-to-equity ratio given our higher CapEx over the next few years? What kind of PBR are we looking at, maybe let's say by 2028 or 2029?
Generally, we target to remain within 1:1 debt-to-equity ratio.
Okay, that would be the target.
That's what we generally keep.
Thank you so much for patiently asking the question.
Thank you. Thank you.
Thank you. Our next question comes from Sumeet Rohra from Smarts un Capital. Please go ahead.
Yes. Sorry to interrupt you, sir. Mr. Rohra, sorry to interrupt you there, sir. You're not audible, sir. May I request you to use your handset, please.
Okay. Sure, sure, sure. Hi, sir. Good morning, firstly, and I congratulate you and the entire team at Indian Oil for doing a wonderful job. Sir, I would like to basically just spend a couple of minutes to talk to you more on the investor angle. Sir, firstly, it is very heartening and congratulations to all the three companies in our downstream sector. Today, Corporate India posted a profit of INR 439,000 crores in the first quarter gone by. The oil marketing companies have reported a profit of INR 16,000+ crores , which is about 4% of India's profit, just the three companies.
As an investor, I come in, the market capitalization of the oil marketing companies is well under 1% of India. On a sustainable basis, you guys are doing about 3% of profit of India, but your market capitalization is just not improving. If you just recall one thing, in 2017, our market capitalization was INR 2 lakh crores, and our balance sheet was about INR 2.5 lakh crores. Today, our market capitalization is INR 2 lakh crores, but our asset value has gone well above INR 5 lakh crores. The one thing which clearly market tells us, which we cannot ignore, is the matter of fact that market does not have clarity in the owning of the oil companies, which is actually happening. The confidence element is clearly missing, right? Otherwise, for a seven-year period, the market capitalization cannot be seen when the underlying business is growing so well.
It's not only for you. It's for all the three companies. As a management, it is our humble request that market capitalization should be considered in the evaluation because it is an integral part of every stakeholder there. Maybe an investor, maybe your shareholder, maybe even the government because the government is the principal owner. Ultimately, market capitalization is all what matters at the end of the day, then you evaluate how much vigor has a company given. Sir, just on the question on the LPG point of view, this suppresses the capability that is good for FY 2025. Is my understanding correct that the entire money would be accounted for in Q2? In spite of it being stated in front, this money would be accounted for in Q2? Your clarity on that, sir, would go a long way in addressing many things. Thank you.
I will address the federal quarters first. As far as the breakup of INR 30,000 crores is concerned, we are awaiting the final modalities to be received from MOPNG. According to it, as per the unit value, it has already given INR 30,000 crores. However, how it will be shared and how much will be given for which period, we are awaiting the final details from the MOPNG. Based on the communication from the ministry, we will be able to share further details with our investors. I'm happy to say that there was a lot of concern in the past whether the oil companies will be getting this compensation or not. Again, back to back, the government has supported the oil marketing companies on this front. Initially, if you remember, out of INR 28,000 crores, we got INR 22,000 crores.
Now, out of INR 41,000 crores, we got INR 30,000 crores. I think that this is a very good sign for the continued support from the oil marketing company. Coming to the first part where you said that market cap sinks, for the past three years, you have seen several huge geopolitical factors affecting the oil and marketing companies. I think that this is also one of the factors which is affecting the companies, how the investors see these oil marketing companies. Definitely, on the operational front, I can definitely talk about Indian Oil that our operational parameters have been beyond our targets. We have rapidly ramped up all our operational fronts. Another one thing I would share is a lot of projects got, you know, we started the project during COVID times. Now the projects are almost going to be completed.
This is a time we are spending a lot of money, but the income has not started coming in our P&L. In the next one year, you will see all the projects getting commissioned and the income start coming in our book of accounts. That should give a big comfort to our investors.
Thank you for that. Just one thing if I may add, sir, the matter of fact that our cash flows are getting stronger as we go ahead. I would request that you should consider a buyback because that will be very effective in boosting our EPS, our financial metrics. Also, it will be a sign of strength, signifying the way we are looking at our things. I would say our request is a buyback should definitely be considered, sir.
Okay. Point noted, please, sir.
Thank you. Thank you.
Thank you, sir.
Thank you. Our next question comes from Acha Shah from Ambit Capital. Please go ahead.
Hi, sir. Am I audible?
Yeah.
I just wanted to understand about the aviation business. Currently, what is our market share, margin structures, and what are the volumes we are doing? Can you shed some light on that? Broad numbers would help.
As far as market share is concerned, our market share dropped between 55%-6 0%. It went from 55% to 60%.
Okay, sir. Sir, about the margins, like how much are we making on an EBITDA level or on a per liter basis?
We don't see a margin on, see, we have an integrated margin. That is why we come with a growth planning module figures in our commercial statements. As such, if you see the international market, the GRM on the aviation front is quite robust. The kind of growth we have been seeing year on year, we are really bullish on the aviation business in our company.
Sir, is there any discounting to maintain the market share? Frag spreads have been positive, but any idea on that front?
In any of the quarters, it is a competitive discount part of the game, and it's based on the market dynamics we find in our strategies. What I am saying is there's so much growth in the aviation sector that all the companies who are in the aviation business have a very robust growth going forward. Our company is very, very focused on the aviation business. This is one business which is going to see some maximum growth in the country. We have a refining extension coming, where we are also focusing on ATF production optimization.
Got it. Sir, just one more question on the throughput. What is our throughput per outlet for like FY 2025 or for when to FY 2026? What are the steps we are taking to increase that figure since BPC is creating on a throughput per outlet basis? To increase the throughput, what are some steps we are taking?
See, my per month throughput is around 130.
KL per month, yeah.
130, 130.
What is the KL per month?
KL per month, yes.
Okay.
I think we are taking a lot of strategies, as Nitin also shared with you, for this Sprint we have started, where we have one of the key targets is one increase of PPT. How it will be done is first, we are targeting the new selling retail outlets. Number two, we also see the new selling retail outlets, how we can, you know, work with our channel partners to increase the sales of our retail outlets. Number three, we are also trying to commission new retail outlets in the segments which are having a very, very high per-performance throughput. As you understand, if you compare with BPC or other oil marketing companies, Indian Oil has been, you know, going to the area where generally the throughputs are not high in the Northeast, in the remote areas.
That is a strength of the company also, that we are present in all the markets in a good strength. It may affect my PPT, but it gives me a leverage to invest. Whenever any expansions are required, any new products are to be introduced, any new expansions are there, we are also targeting a few other, you know, expansions. We have already a joint venture company in the fertilizer sector. I think we can see all these things in a holistic basis, where we will be able to encash even those retail outlets who doesn't give you higher PPT today.
Sir, would we be thinking of discounting?
Pardon?
Would we give additional discounts versus the other PSU OMCs?
three oil marketing companies generally maintain the same pricing strategy in the market, so that way all the three marketing companies are aligned to each other.
Just one last question. What will the LPG under-recovery costs in 1Q FY 2026 and in August, or currently, what is the per cylinder loss under-recovery?
If you see the LPG under-recovery in Q1 financial year 2025-2026, it was around in the range of INR 160- INR 165 per cylinder. Today, it is in the range of INR 100- INR 105 per cylinder as of date.
Okay, sir. Thank you. Thank you for your response.
Thank you.
Thank you. Our next question comes from S. Ramesh with Nirmal Bang Equities. Please go ahead.
Good morning, and thank you very much. Can you share the breakup of the inventory loss you mentioned between refining and marketing?
See, we normally, I can give an indicator to you. It is around 50/50 percentage. What would be my loss in the crude and the product side?
The total inventory loss is INR 6,500 crores. Is that correct?
Yes, yes, that is correct.
Okay. If you look at your gas business, the revenue YoY, if you look at last year first quarter and this year first quarter, it's more or less the same. At INR 10,000 crores, the profits have crashed from INR 654 crores to INR 50 crores. What is happening there? Is there a loss in your LNG business? We know that the CGD business is not that big, so you may have had some challenges there. What is happening on the LNG business? Going forward, how do you see the gas business perform, both in this annual CGDs and your LNG business?
See, as far as the gas business is concerned, that is one of the most profitable businesses for Indian Oil. The margins, you know, the international rates have been high for anything in the past one quarter. It definitely affected our profitability.
Okay. What is the way forward? How do you see the gas segment move from here in terms of the growth in your CGD business, in terms of the CapEx in CGD and the number of CNG stations?
See, if you said you get my gas segment, one is the LNG, one is the CNG. That will continue to be a reasonably stable business for me. Number two is my LNG business for the industrial use. There, the margins have come down because of the high pricing in the international market. The third segment should be the segment. It is definitely becoming stronger day by day. As of date, it doesn't give you a huge either profit or negative to my gas business.
Okay. Can you share what is the kind of CapEx you want to do in this annual CGDs, and what is the kind of growth in volumes you expect from the volumes you have shared for the first quarter over the next two years?
Yeah, let me give me one minute. See, as far as I'm concerned, we have a target of spending almost INR 22,000 crores in my total CapEx, which I am initiating in my CGD segment. Already, I have spent almost INR 4,000-INR 5,000 crores as of date. We aim to spend almost INR 1,000 crores each year in the CGD segment. We want to, you know, monetize our investments in the times to come. We will spend the money as GA, we assume that GA starts giving the money to me. My dominant focus is my LNG segment for the industrial use and also CNG business.
Okay. Going back to LNG and your petrochemical business, for LNG, you have this Ennore Terminal. You're planning to expand that. How do you see the LNG economics going forward? What is the kind of break-even you need? There's a lot of competition from the new terminals at Dhamra and Petronet LNG is talking about something in Gopalpur. In terms of your current cash flows from the Ennore Terminal, if you can shed some light in terms of what is the profit or loss you're making and how you see that changing based on your expansion plans from 5 million tons to 10 million tons?
See, if I see my existing Yenaw Terminal capacity utilization, in 2023, 2024, it was around 18%, which then improved, which became 25% in 2024, 2025. This year, I'm expecting it to again go up to 31%- 32%. By next year, it should be quite high because the way the infrastructure is getting created along with the Ennore Terminal, definitely the demand from the Ennore Terminal will go high.
Okay. Your last thought on petrochemicals. We all know that the margins are under pressure globally. You have an integration plan in terms of increasing the share of petrochemicals. In terms of your competitive advantage, if you revisit this narrative about the domestic market being import-dependent, what is the kind of cost leadership you like based on your increased capacities? Would you be there in the top 10% or 25% in terms of cost leadership? Would that be a competitive advantage to ramp up the petrochemical business and cash flows, assuming that the excess capacity may not get mitigated because China keeps adding capacity? That is a clear overhang. Given that context, how do you see you remaining competitive once your expansion plans are completed?
See, as you all understand, petrochemicals, there is a huge demand in the country. I think there's no doubt. Number two, we also know that with petrochemicals, the natural integration further in Indian Oil. We use our own naphtha and other quotas for the petrochemicals. Otherwise, we have to export those things. In the future, if you see an integrated model, it makes much more logical for me to have a petrochemical expansion. With a lot of refining expansions coming, definitely, I would be having a raw material to feed my future petrochemical expansion. As far as the margin, yes, today we are in the down cycle of the refining margin, petrochemical margin. If you see, petrochemical margin is generally always EBITDA positive for me.
If you see the general cycle, by the time my major petroleum expansions will come on board, we expect the cycle of petroleum to come back. Major all the companies are knowing that it's a cyclical industry. Whenever a positive cycle comes, then we will be happy to then get returns from our huge investments.
Last time, you had mentioned that your three refinery expansions are getting started by FY 2027. If you see the expansion in capacity and the increase in use, what would be the delta in refining margins you can expect from these three refinery expansions from FY 2027?
If you see the delta margin, it will be very difficult to predict because today, the refining margins are so good. It's all dependent upon the international markets. Definitely, whatever returns, whatever is my cost of capital, I'm definitely going to earn beyond that. It will give me a positive margin on my investment. How much it will be given will be depending upon the international markets. If you see the total margin, it is quite robust.
Okay, thank you very much.
Yeah, thank you.
Right, sir. Thank you very much. I'll join with you. I wish you all the best.
Thank you.
Thank you. Our next question comes from Harvik Solanki with ICICI Securities. Please go ahead.
Yeah, my question already got answered. Thank you.
Thanks, sir. Our next question comes from Amit Murarka with Axis Capital. Please go ahead.
Yeah, hi. Thanks for the opportunity. Actually, I joined a bit late, so sorry if I'm repeating this question, but could you provide the marketing inventory losses in the quarter?
Sure. I'll share that during Q1 2025-2026, I got a hit of INR 6,500 crores due to inventory losses. If you see the quarter one of the previous year, it was INR 10,000 crores. The delta is almost INR 10,000 crores.
Last year Q1 was INR 3,500 crores?
Yes.
Sure. On the refinery project, what I understand is that Barauni comes next year fiscal year, sometimes Q2, and Koyali and the other refinery comes by the end of the fiscal year. Is that the current timeline as well, or is there further change to that?
See, as of now, our Panipat and Gujarat are scheduled to be commissioned in the end of this year or first quarter of this calendar year. The Barauni, yes, you are right, is coming around August 2026. The expansions will come in phases, so accordingly, our budget will get scaled up.
What is the CapEx guidance for this year now?
See, we have already targeted to spend INR 34,000 crores during the financial year 2025- 2026. Out of that, refinery will almost take INR 14,000- 15,000 crores. The petrochemicals, marketing, price range, CGD, all put together, there will be another INR 15,000- 16,000 crores.
Understood. Just lastly, on Russian crude discounts, these deltas also come down. Could you just comment a bit on the discounts you could book into and what's the outlook for the period Q2 and ahead? Also, the crude sourcing, has that been stopped now in the wake of the current situation with the U.S.?
I shared these numbers before. If I add up here, 2024-2025, we almost got 22% of the Russian crude. During the quarter one of 2025-2026, it is almost 24%. This quarter, we are continuing to buy the Russian crude, depending upon the economics.
What would be the discount right now?
It is around $1.5.
Okay. Yeah, thank you so much, sir.
Yes.
Thank you. Our next question comes from Somaiah with Avendus Spark . Please go ahead.
Thanks for the opportunity, sir. First question is on the refinery expansion. So 18 million ton expansion. Next year, please, what kind of incremental throughput does your business take? We ramp up into consideration. That's the first part. Second, in terms of product fleet, what is the picking intensity of this coming online? A diesel and petrol, if you could give some color in terms of our existing product mix versus the new refinery?
I will do one by one. First of all, Barauni, see, this is due to this commission in August 2026. Generally, as per the past 15 years, it generally takes 24 months for 100% capacity utilization. That is a scale that is for Barauni. For both Panipat and Gujarat, they are expected to be commissioned by the end of this year. Both the units, Gujarat and Panipat, will take around 24 months for achieving 100% additional throughput, what we are targeting. I will not be able to give the exact numbers, but yes, Panipat is strengthened for 10 MMTPA. Gujarat is for 4.3 MMTPA. Barauni for additional 3 MMTPA. The total, almost 17.3 MMTPA, will get added in these three refineries. As far as the port freight is concerned, definitely, we are always, obviously, the major component. As I shared earlier, MS and ATF.
We try to maximize these three products. Altogether, MS, HSD, and ATF should give me around 70%.
Got it, sir. Sir, also on the CapEx run rate now that the refinery expansions are nearing completion, how should we think about the next couple of years? Whether this INR 33,000, INR 34,000 crores of run rate would be there or can it come off? Also, in marketing, you did mention that 4,000 outlets. How do we see the intensity of outlet additions in the next couple of years? Can it come off?
See, actually, you are correct that most of my refinery expansions will be over by financial year 2026-2027. Okay. There's a, I have already announced a $1 billion petrochemical project in Paradip. That will start as we start spending money on that CapEx. Yes, I must share one thing that we don't have any specific targets to do any CapEx, but we want to, you know, remain the major energy player in this country. Apart from the refining and petrochemicals, we are also targeting additional investments into the renewable sector now. We are targeting the 30 GW renewable energy target by 2030. For that, we have a 100% subsidiary company also now. Apart from that, we are also investing hugely into the gas sector. All put together, my CapEx may not be INR 40,000 crores per year.
It should be around INR 30,000 crores in the coming time, in the next four to five years.
Got it, sir. Just a point on marketing retail outlets. This run rate of 4,000, should we expect it to kind of come off in the next few years, or the same intensity will kind of?
It will come down. Definitely, it will come down in the coming years.
Got it.
Based on the market demand also, it's a highly competitive industry. We will have to see how the market performs. We don't have any, I cannot give any specific numbers, but yes, based on the market dynamics, we expect the number to gradually come down in time to come.
Got it.
Thank you. Our next question comes from NM Modi, who's an investor. Please go ahead.
Technical, I will pass technical and engineering.
Mr. Modi, your line is being unmuted. Hello? There's no response. We move to the next participant. Our next question comes from Achal Shah from Ambit Capital. Please go ahead.
Sir, thank you for taking the follow-up. Just let us know, sir, the current economic lending percentage and what is your take on the current situation about the negativity on the lending or the car warranties and whatever is going on?
We achieved the 99.99%, almost 20% target in 2025-20 26 now. We are fully here to achieve this target.
Is there any mandate to increase this target? What's your take on that? Currently, I think it's 20%. Do you think it can go in the next few years?
See, we have the mandate for 20% and we achieved a target of 20%. As of now, this is the target we have been given and we are going to achieve that.
There is one more question on the retail outlet expansion plan. Can you give a sense of how many outlets would we reach by FY 2026 and FY 2027 end?
If we reach to commission almost 40, we will be touching 48,000 retail outlets by the end of 2027.
At 2027?
Yeah.
Okay, thank you, sir.
Thank you. Our next question comes from Navneet Tyagi from Urbanc Engitech . Please go ahead.
Yes, sir. Very good morning, sir.
Yeah.
Hello?
Yes, please.
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Sorry to interrupt you, sir. May we request that the management will get in touch with you. Thank you, sir.
Yes.
The next question comes from S. Ramesh from Nirmal Bang Equities. Please go ahead.
Thank you for the follow-up. If you look at your other segment, there is a difference in terms of the losses being lower in the consolidated entity compared to the standalone. On a YoY basis, there is a swing from profits to loss. If you can put the other business in context, you mentioned something in the annual report about cryogenic and explosives. Is there any potential for this performance to improve to profitable operations? In terms of ROCE, would you be able to get double-digit ROCE in the other activities?
See, if you see my other business activities, as per my standalone account, this quarter, my profit before tax and net worth is -INR 374 crores , which was upwards. This was negative of INR 216 crores in quarter four, 2024-2025. This has increased. This is on account of other segments like E&P. We have other segments also.
E&P write-off. E&P write-off, again, one second.
We have also done a write-off of one of our E&P investments of INR 340 crores this quarter.
340 crores?
That was a one-time activity which has resulted into a negative figure this time. If you see, last year it was + INR 24.34 crores. If you compare these two figures, there's a one-time write-off in our books of accounts that has resulted into a negative of INR 374.46 crores in Q1 2025-2026.
Do you see this segment getting into profitable operations on a pretty upbeat stage? You mentioned some plans for cryogenics and explosives in your annual report. The other explosive companies are actually doing fairly well. Do you see your explosive business also kind of getting into the growth trajectory? What are your plans in the other activities, including E&P, cryogenics, and explosives?
See, if I see my other business segments, definitely my cryogenics business and my explosives business are positive contributors in my opinion. Other segments like E&P, depending upon the dynamics, crude oil dynamics will become profitable a lot. The way we are adding our new renewable business, solar and wind, after one or two years, you will see huge revenue coming from that segment as well. That's a segment that's coming through my subsidiary and JV companies. It will be coming through that segment in my books of accounts.
Okay. My reason and last thought on green hydrogen and the sustainable aviation fuels, can you give us some visibility on the commercial aspect in terms of what will be the pricing and ROCE, say, like for sustainable aviation fuels for the investments? How would you, you know, get the margins or return on capital? Clearly, for green hydrogen, would you depend on government subsidy or what would be the kind of economics for that investment?
India Oil became the first company to set up such a large 10 KTPA green hydrogen project at Panipat. This is a capital usage. That means whatever hydrogen is produced, it will be used by my own refineries. This is one of the really good and I think good investments by Indian Oil . That will keep track of a future leap of trend in the hydrogen sector. As far as SAF is concerned, that is also, you know, this is a very upcoming sector. Whatever investments we will do, we are, as per the track reports, we should be able to get returns on SAF investments also. As far as SAF fuel is concerned, it will be a profitable business for us. As far as green hydrogen is concerned, as of now, it is a for my category.
Based on this experience, my other commercial activities will start in the future.
The cost of green hydrogen will be about $3.5- $4 per kg?
Yes, you're correct. Yeah.
Okay, thank you. Wish you all the best.
Thank you.
Thank you. Our next question comes from Vipul Kumar Shah from Sumangal Investments. Please go ahead.
What will be the CapEx for your Paradip refinery where you are putting this petrochemical complex, and when will it start and when will it be commissioned?
As of the total investment in rupee terms, if you talk about, is almost INR 60,000 crores. The budget is under the stage one as of now. The regional references have been appointed. It will take almost 54 months from investment approval.
Okay. One small suggestion, sir, if you can put all your expansions refinery-wise or petrochemical, I call other oil marketing companies are doing stage-wise, it will be better.
Okay, that I'm very happy to provide.
Thank you for the clarity.
Thank you.
Yeah, thank you.
Thank you. Ladies and gentlemen, that was the last question for today. As there are no further questions from the parties, I now hand the content over to Mr. Varatharajan Sivasankaran from Antique Stock Broking Ltd for closing comments.
Before we go, I would like to hand the call to the management for their closing remarks after we share a link.
Thank you all for your timing and insightful questions. On behalf of the IOCL team, thank you once again for your continued trust and support. We look forward to engaging with you in our future interactions and keeping you updated on all our progress. Thank you. Stay safe and take care. Thanks.
Thank you, sir. I, to tag on behalf of Antique Stock Broking Ltd, all the participants, patronage, management for answering all the questions. I'm taking a timeout to open this call. Thank everyone and organize this.
Thank you.
Thank you. On behalf of Antique Stock Broking Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.