India’s three state-run oil marketing companies—Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL)—reported a combined standalone net profit of ₹30,106 crore in the July–September quarter of FY27. The result represents nearly 39% of their combined profit for the entire previous financial year and marks a sharp recovery from the losses recorded in the preceding quarter.
The combined profit increased 68.3% year-on-year, supported by stronger refining margins and inventory gains. Indian Oil accounted for most of the earnings, reporting its highest-ever standalone quarterly net profit. BPCL and HPCL, however, recorded year-on-year declines in profit. The performance came despite frozen petrol and diesel prices and mounting losses on domestic LPG sales.
Key Takeaways
- IOC, BPCL and HPCL reported combined standalone net profit of ₹30,106 crore in Q2 FY27.
- Combined earnings increased 68.3% year-on-year.
- The quarterly profit was equivalent to nearly 39% of their combined FY26 profit of ₹77,281 crore.
- IOC reported a record standalone quarterly profit of ₹21,630 crore.
- BPCL’s net profit declined 22.5% to ₹4,993 crore, while HPCL’s fell 9% to ₹3,483 crore.
- Higher refining margins and inventory gains supported earnings.
- The three companies had accumulated ₹67,900 crore in fuel under-recoveries by September 30, 2026.
- IOC warned that falling crude prices could create inventory losses in subsequent quarters.
Combined Q2 Profit Reverses Previous Quarter’s Losses
The three oil marketing companies delivered a significant turnaround compared with the April–June quarter of FY27.
Together, IOC, BPCL and HPCL had reported a combined loss of approximately ₹18,150 crore in Q1 FY27. Their combined profit of ₹30,106 crore in Q2 represents a substantial recovery in just three months.
| Financial indicator | Q2 FY27 | Q2 FY26 |
|---|---|---|
| Combined standalone net profit | ₹30,106 crore | Approximately ₹17,891 crore |
| Year-on-year growth | 68.3% | — |
| Combined FY26 annual profit | ₹77,281 crore | — |
| Q2 profit as a share of FY26 profit | Approximately 39% | — |
The comparison shows the scale of the earnings recovery. The three companies generated almost two-fifths of their previous full-year earnings in a single quarter.
However, the combined figure conceals significant differences between the companies. Indian Oil generated the largest share of profits, while BPCL and HPCL reported lower earnings than a year earlier.
IOC Leads With Record Quarterly Profit of ₹21,630 Crore
Indian Oil Corporation was the biggest contributor to the combined Q2 earnings.
The company reported standalone net profit of ₹21,630 crore, almost three times the ₹7,610 crore recorded in the corresponding quarter of the previous year.
| Company | Q2 FY27 standalone net profit | Q2 FY26 standalone net profit | YoY change |
|---|---|---|---|
| Indian Oil Corporation | ₹21,630 crore | ₹7,610 crore | Approximately +184% |
| Bharat Petroleum | ₹4,993 crore | Approximately ₹6,443 crore | -22.5% |
| Hindustan Petroleum | ₹3,483 crore | Approximately ₹3,828 crore | -9.0% |
| Combined | ₹30,106 crore | Approximately ₹17,881 crore | +68.3% |
Figures are standalone net profits. Rounded comparative figures may produce minor differences in totals.
IOC’s quarterly profit alone represented nearly 59% of its FY26 standalone profit of ₹36,802 crore.
The company attributed its performance to improved refining margins and contributions from its petrochemical and gas businesses.
A temporary decline in crude oil prices between mid-June and mid-August also helped. Lower crude acquisition costs supported refining economics and generated an estimated inventory gain of around ₹7,000 crore.
This combination of operating performance and inventory gains played a major role in IOC’s record quarter.
BPCL and HPCL Report Lower Year-on-Year Profits
While IOC delivered a record result, the other two companies reported declines in quarterly earnings.
Bharat Petroleum Corporation (BPCL)
BPCL reported standalone net profit of ₹4,993 crore in Q2 FY27, down 22.5% from the corresponding quarter last year.
Despite the decline in net profit, its refining business benefited from a sharp improvement in gross refining margins.
BPCL’s gross refining margin (GRM) increased to $32.53 per barrel in Q2 FY27, compared with $10.78 per barrel in Q2 FY26.
Hindustan Petroleum Corporation (HPCL)
HPCL reported standalone net profit of ₹3,483 crore, representing a 9% year-on-year decline.
Its gross refining margin increased to $32.15 per barrel, compared with $8.80 per barrel in the year-ago quarter.
The improvement in refining margins indicates that both companies benefited from better refining economics, even though their reported net profits remained below the previous year’s levels.
Why Did Oil Companies Earn So Much Despite Frozen Fuel Prices?
The biggest reason behind the earnings recovery was the improvement in refining margins.
Oil marketing companies operate across several activities, including crude oil refining, fuel retailing, transportation, petrochemicals and gas businesses.
Their profitability therefore depends on more than the difference between crude oil prices and petrol or diesel prices at fuel stations.
Two factors were particularly important during Q2 FY27.
1. Higher refining margins
Gross refining margin measures the difference between the value of petroleum products produced by a refinery and the cost of crude oil used to manufacture them, before other operating costs.
When refining margins rise, companies can earn more from processing each barrel of crude oil.
The Q2 figures demonstrate this improvement:
| Company | Q2 FY26 GRM | Q2 FY27 GRM |
|---|---|---|
| BPCL | $10.78/barrel | $32.53/barrel |
| HPCL | $8.80/barrel | $32.15/barrel |
Both companies recorded substantial improvements in refining margins.
IOC also benefited from stronger refining economics, alongside contributions from its other businesses.
2. Inventory gains from falling crude prices
Inventory gains also supported earnings, particularly at IOC.
Oil companies purchase crude oil and maintain inventories of crude and petroleum products. When crude prices decline, the value of previously purchased inventory and the cost of replacing it can change.
During part of Q2, falling crude prices helped IOC benefit from lower feedstock costs and inventory-related gains.
However, inventory movements can work in the opposite direction. If crude prices fall further, companies may face inventory losses on stocks acquired at higher prices.
IOC has specifically warned about this possibility in its earnings commentary.
Fuel Price Freeze Continues to Pressure Retail Operations
The strong quarterly results do not mean that the companies have stopped facing losses on fuel sales.
Petrol and diesel prices remained frozen despite movements in international crude and refined-product prices.
Industry sources cited in the report said the companies were losing approximately ₹4–5 per litre on petrol and ₹18–20 per litre on diesel as recently as October.
Domestic LPG also remains a source of financial pressure.
The companies sell domestic cooking gas at regulated retail prices, while their actual procurement costs can be higher. The difference creates an under-recovery that the government is expected to compensate through subsidies.
However, delays in government compensation have increased the amount outstanding on the companies’ books.
IOC Director (Finance) Anuj Jain said LPG under-recoveries were ₹184 per cylinder in September and had increased to ₹229 in October. He expected the figure to rise further to ₹309 in November and ₹370 in December.
These are reported estimates and expectations, not final realised losses for those future months.
Oil Companies Accumulate ₹67,900 Crore in Under-Recoveries
The three companies had accumulated combined fuel under-recoveries of approximately ₹67,900 crore as of September 30, 2026.
| Company | Reported under-recoveries |
|---|---|
| Indian Oil Corporation | ₹32,505.69 crore |
| Bharat Petroleum | ₹17,334.40 crore |
| Hindustan Petroleum | ₹18,048.82 crore |
| Total | ₹67,889 crore |
The rounded combined figure is approximately ₹67,900 crore.
These amounts reflect the financial gap associated with selling fuel below the relevant cost or benchmark, including the outstanding LPG compensation burden.
The figures are important because quarterly accounting profits and cash recovery from the government are not the same thing. A company can report a strong profit while still carrying substantial amounts of outstanding compensation and under-recoveries.
The timing of government payments and future fuel-price adjustments will therefore remain important for the companies’ cash flows.
The Bigger Picture
The Q2 FY27 results show how strongly refining economics can influence the financial performance of India’s public-sector oil marketing companies. Improved gross refining margins and inventory gains helped reverse the heavy losses recorded in the previous quarter, with IOC contributing most of the combined earnings.
However, the results also reveal a structural challenge. The companies continue to balance refining profitability against the financial burden of selling fuels at prices that may not fully reflect international market costs. Delayed LPG compensation and losses on petrol and diesel sales remain important risks.
The ₹30,106 crore quarterly profit is therefore a strong earnings recovery, but it should not be treated as evidence that all pressure on the companies’ fuel-retailing businesses has disappeared.
Looking Ahead
The next few quarters will depend heavily on crude oil prices, refining margins and the government’s approach to domestic fuel pricing and LPG compensation. If crude prices decline sharply, inventory losses could offset some of the gains recorded during Q2. If refining margins remain healthy, they may continue to support the companies’ operating performance.
Investors will also monitor whether outstanding under-recoveries are compensated on time and whether retail fuel prices are adjusted as input costs change. IOC, BPCL and HPCL have demonstrated how quickly their earnings can recover when refining conditions improve, but sustaining that performance will depend on a more balanced combination of refining profits, fuel-retail economics and subsidy payments.
Frequently Asked Questions
1. How much profit did IOC, BPCL and HPCL report in Q2 FY27?
The three companies reported combined standalone net profit of ₹30,106 crore for the July–September quarter of FY27, up 68.3% year-on-year.
2. Which oil company reported the highest Q2 FY27 profit?
Indian Oil Corporation reported the highest profit, with standalone net profit of ₹21,630 crore. It also recorded its highest-ever standalone quarterly net profit.
3. Why did oil companies report such high profits?
Higher refining margins, inventory gains and contributions from other businesses supported earnings. IOC benefited particularly from improved refining economics and an estimated ₹7,000 crore inventory gain.
4. What is the gross refining margin?
Gross refining margin, or GRM, measures the difference between the value of petroleum products produced and the cost of crude oil processed. It is an important indicator of a refinery’s operating economics.
5. How much did BPCL and HPCL earn in Q2 FY27?
BPCL reported standalone net profit of ₹4,993 crore, while HPCL reported ₹3,483 crore. Their profits declined 22.5% and 9%, respectively, year-on-year.
6. What are fuel under-recoveries?
Under-recoveries arise when oil marketing companies sell fuel at prices below the relevant cost or benchmark. In the case of domestic LPG, the difference between the regulated retail price and the actual cost is expected to be compensated through government subsidies.
7. How much are IOC, BPCL and HPCL owed in fuel under-recoveries?
The three companies had accumulated approximately ₹67,900 crore in fuel under-recoveries as of September 30, 2026, according to their reported figures.
8. Could oil companies’ profits decline in future quarters?
Yes. Lower crude prices could create inventory losses, while weaker refining margins, continued retail fuel losses and delayed LPG compensation could put pressure on future earnings. IOC has specifically flagged the possibility of inventory losses.
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