Indian Oil Corporation's Strong Q4FY23 Results Driven by Higher Refinery Throughput, Sales Volume and Improved Marketing Margins

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Indian Oil Corporation (IOC), the country's largest oil marketing company, has reported a strong performance in the fourth quarter of fiscal year 2023 (FY23). The company's consolidated net profit grew by 52% year-on-year (YoY) to Rs 10,841 crore, compared to Rs 7,089 crore in the same quarter of the previous fiscal. Revenue from operations also increased by 10% YoY to Rs 2.30 lakh crore in the March quarter, compared with Rs 2.09 lakh crore in the corresponding quarter of last year.

The company's strong performance was driven by a number of factors, including:

  • Higher refinery throughput and sales volume
  • Lower inventory losses
  • Better product mix
  • Improved marketing margins
  • Benefit from cheap Russian crude oil

Refinery Throughput and Sales Volume

IOC achieved its highest-ever refinery throughput of over 72.4 million tonnes (MT) in FY23, compared to 67.67 MT in FY22. The company's refineries operated at an average capacity utilization of 103% in Q4FY23, compared to 93% in Q4FY22. The company also achieved its highest-ever liquid pipeline throughput of 94.7 MT in FY23, compared to 83.25 MT in FY22.

The company's petroleum products (POL) sales volume grew by 14% YoY to 97.3 MT in FY23, compared to 85.5 MT in FY22. The company's POL market share increased from 40.8% in FY22 to 42.9% in FY23. The petrol sales volume increased by 19.2% YoY, diesel sales volume increased by 19.3% YoY and LPG sales volume increased by 1% YoY in FY23.

Inventory Losses and Marketing Margins

IOC reported a lower inventory loss of Rs 1,286 crore in Q4FY23, compared to Rs 3,617 crore in Q4FY22. The inventory loss was mainly due to the fall in crude oil prices during the quarter. The company's average crude oil price was $61.6 per barrel in Q4FY23, compared to $64.3 per barrel in Q4FY22.

The company's marketing margins improved significantly in Q4FY23, as it was able to pass on the increase in international product prices to the consumers. The company's calculated marketing margins for petrol were Rs 6.8 per litre and for diesel were Rs 1.2 per litre for Q4FY23. The company also received a compensation of Rs 3,500 crore from the government for selling kerosene and domestic LPG below cost.

Outlook and Challenges

IOC has delivered a stellar performance in Q4FY23 despite the challenges posed by the Covid-19 pandemic and the volatility in the global oil market. The company has also declared a final dividend of Rs 3 per share for FY23.

The company is optimistic about the growth prospects for FY24, as it expects the demand for petroleum products to recover with the easing of lockdown restrictions and the vaccination drive. The company is also focusing on expanding its refining capacity, diversifying its product portfolio, enhancing its petrochemicals business and exploring new avenues of growth such as renewable energy, hydrogen and biofuels.

However, the company also faces some risks and uncertainties, such as the fluctuation in crude oil prices, the impact of the second wave of Covid-19 on demand and operations, the competition from private players and new entrants, and the regulatory and policy changes that may affect its profitability and margins.

Conclusion

IOC has shown resilience and agility in coping with the unprecedented situation caused by the pandemic and has emerged stronger and more competitive. The company has demonstrated its operational excellence, financial discipline and customer-centric approach in delivering a commendable performance in Q4FY23. The company is well-positioned to leverage its strengths and capabilities to capture growth opportunities in the domestic and international markets.

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