Indian Oil Corporation Ltd. reported a surprise profit in the third quarter despite lower gross refining margin and sharp fall in crude oil prices.
Net profit stood at Rs 717 crore in the October-December period, a 78 percent fall sequentially, the state-run oil marketer said in an exchange filing. That compares with Rs 680-crore loss estimated by BloombergQuint.
Oil refiners typically buy crude a quarter in advance. As oil prices fell, refiners who had bought the stock at a higher rate sold it cheaper.
Revenue rose 6 percent quarter-on-quarter to Rs 1,39,967 crore, higher than the Rs 1,23,995 crore estimate.
The earnings before interest, tax, depreciation and amortisation fell 47 percent to Rs 3,609 crore. The operating margin also contracted 250 basis points to 2.58 percent.
Gross refining margin, or the earnings per barrel of oil, fell to $1.15 per barrel, as per company, compared with $2.4 per barrel expected by analysts.
Higher marketing margins saved the day for the state-run oil company, said Probal Sen, senior vice president, research (oil and gas) at IDFC Securities. However, he expects the gross refining margin to be much lower in fourth quarter. “We are looking at a difficult 12-15 month period for Indian refiners," said in an interaction with BloombergQuint.
Shares of Indian Oil declined 2 percent to Rs 135 apiece after the earnings announcement.
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