Indian Oil Corporation (IOC), the country’s largest oil marketing company, reported a 174.7% year-on-year increase in consolidated net profit to ₹22,502.62 crore for the second quarter of FY27. Profitability recovered sharply after the company posted a consolidated loss of ₹1,241.09 crore in the June quarter, supported by improved fuel marketing margins and the recognition of government compensation related to domestic LPG under-recoveries.
Consolidated revenue from operations increased approximately 30% to ₹2.68 lakh crore in the quarter ended September 30, 2026, compared with ₹2.06 lakh crore in the corresponding period last year. Domestic fuel sales also increased, while exports declined. The results reflect a combination of improved operating conditions and compensation-related accounting support, making it important to look beyond the headline profit growth when assessing IOC’s performance.
Key Takeaways
- Consolidated net profit: ₹22,502.62 crore, up 174.7% year-on-year.
- Revenue from operations: ₹2.68 lakh crore, up approximately 30%.
- Previous-quarter performance: Returned to profit after a ₹1,241.09 crore loss in Q1 FY27.
- First-half net profit: ₹21,361.53 crore, up approximately 42%.
- Domestic sales: 23.977 million tonnes, compared with 22.85 million tonnes a year earlier.
- LPG compensation: ₹7,243.02 crore recognised as revenue for April–September 2026.
- Key drivers: Improved marketing margins, fuel price changes and government compensation.
IOC’s Q2 Net Profit Rises 175% Year-on-Year
Indian Oil’s consolidated net profit increased to ₹22,502.62 crore in Q2 FY27 from ₹8,190.86 crore in Q2 FY26.
The improvement was also significant on a sequential basis. IOC had reported a consolidated net loss of ₹1,241.09 crore in Q1 FY27, meaning the company returned to profitability in the September quarter.
Consolidated revenue from operations increased to ₹2,68,039 crore from ₹2,06,447 crore in the year-ago quarter. Total income also rose approximately 30% to ₹2,68,713 crore.
IOC Q2 FY27 financial performance
| Financial metric | Q2 FY27 | Q2 FY26 |
|---|---|---|
| Revenue from operations | ₹2,68,039 crore | ₹2,06,447 crore |
| Total income | ₹2,68,713 crore | ₹2,07,091 crore |
| Net profit | ₹22,502.62 crore | ₹8,190.86 crore |
| Net profit growth | +174.7% | — |
Figures are consolidated and rounded where appropriate.
The results show strong growth in both revenue and profitability. However, the sharp increase in net profit also reflects government compensation recognised during the period, rather than only an improvement in the underlying fuel business.
Government LPG Compensation Adds to Revenue
One important factor behind IOC’s financial performance was the recognition of government compensation related to losses incurred from selling domestic LPG.
In October 2025, the Ministry of Petroleum and Natural Gas communicated government approval for compensation of ₹14,486 crore towards under-recoveries incurred on domestic LPG sales up to March 2025 and those expected up to March 2026.
Under-recoveries occur when oil marketing companies sell products at prices that do not fully cover their costs.
IOC disclosed that instalments aggregating ₹7,243.02 crore for April–September 2026 were recognised as revenue from operations during the first half of FY27. The company also said this reduced its cumulative net negative buffer by the same amount.
This is an important distinction for investors.
The compensation supports the company’s reported revenue and financial position, but it should not be interpreted as ordinary revenue generated by selling more petrol, diesel or LPG to customers.
The timing and accounting recognition of such compensation can materially influence quarterly results.
Higher Fuel Marketing Margins Support Profitability
Another factor supporting IOC’s recovery was the improvement in marketing margins.
Oil marketing companies such as Indian Oil purchase crude oil, refine it into petroleum products and sell fuels through retail outlets and other distribution channels.
Their profitability depends partly on the difference between the cost of purchasing and processing crude oil and the prices at which finished fuels are sold.
When retail fuel prices remain unchanged while crude oil costs rise, marketing margins can come under pressure. Conversely, improved selling prices or lower input costs can support margins.
Moneycontrol reported that IOC’s improved marketing margins followed the government’s cumulative ₹7 increase in retail fuel prices in May 2026.
This helped the company recover from the loss reported in the preceding quarter.
However, marketing margins remain sensitive to international crude prices, exchange-rate movements, domestic fuel pricing decisions and transportation costs.
Domestic Fuel Sales Increase, Exports Decline
IOC recorded higher domestic sales during Q2 FY27, reflecting growth in its domestic petroleum product business.
Domestic sales increased to 23.977 million tonnes, compared with 22.85 million tonnes in Q2 FY26.
Exports moved in the opposite direction, declining to 1.251 million tonnes from 1.411 million tonnes in the year-ago quarter.
IOC’s petroleum product sales
| Sales category | Q2 FY27 | Q2 FY26 |
|---|---|---|
| Domestic sales | 23.977 million tonnes | 22.85 million tonnes |
| Exports | 1.251 million tonnes | 1.411 million tonnes |
Domestic sales growth is important because India remains a major market for transportation fuels, cooking gas and industrial petroleum products.
IOC’s extensive refining, pipeline, distribution and retail infrastructure gives it a significant position in supplying these products across the country.
The increase in domestic volumes also provides context for the company’s higher revenue, although product prices and the mix of fuels sold influence the final financial outcome.
First-Half FY27 Profit Reaches ₹21,362 Crore
For the six months ended September 30, 2026, IOC reported consolidated net profit of ₹21,361.53 crore, an increase of approximately 42% from ₹14,998.98 crore in the corresponding period of FY26.
Consolidated revenue from operations during the first half increased to ₹5,49,972 crore from ₹4,28,296 crore.
The first-half figures are particularly useful because they show the impact of the weak June quarter alongside the strong September-quarter recovery.
IOC H1 FY27 consolidated performance
| Financial metric | H1 FY27 | H1 FY26 |
|---|---|---|
| Revenue from operations | ₹5,49,972 crore | ₹4,28,296 crore |
| Net profit | ₹21,361.53 crore | ₹14,998.98 crore |
| Net profit growth | Approximately 42% | — |
Despite the sharp Q2 recovery, the first-half net profit remains below the September-quarter figure because the company recorded a loss in Q1.
This highlights why investors should examine both quarterly and half-year results rather than relying exclusively on year-on-year growth in one quarter.
What IOC’s Results Mean for India’s Oil Marketing Sector
IOC’s results offer insight into the operating environment for India’s public-sector oil marketing companies.
These companies face several interconnected factors: international crude oil prices, refining margins, retail fuel prices, government policy and compensation for selling subsidised products.
A change in any of these variables can significantly affect quarterly profitability.
The LPG compensation recognised by IOC also highlights the financial implications of keeping domestic cooking gas affordable.
When companies sell LPG below the level required to recover their costs, the resulting under-recoveries can put pressure on their finances. Government compensation can help offset those losses, but the timing of recognition and payment remains important.
For investors, the sustainability of IOC’s earnings will depend on the performance of its refining and marketing operations, future fuel pricing conditions and the treatment of outstanding compensation.
The Bigger Picture
IOC’s 175% profit growth demonstrates how quickly earnings at oil marketing companies can change when fuel marketing margins improve and government compensation is recognised. The September-quarter recovery was supported by higher domestic sales and a more favourable marketing environment, but the ₹7,243.02 crore LPG compensation recognised during the first half is also an important part of the financial picture. The headline profit growth should therefore not be viewed as a direct measure of recurring operating performance alone.
The broader challenge for IOC is to maintain profitability while managing volatile crude prices, domestic fuel affordability and the costs of supplying LPG. Its large refining and distribution network provides scale, but earnings will continue to depend on the balance between input costs, selling prices, operating margins and government support. Investors will be watching whether the improved marketing environment continues in the coming quarters.
Looking Ahead
IOC’s next quarterly results will provide a clearer indication of whether the improvement in fuel marketing margins can be sustained. Investors will also monitor crude oil prices, refining margins, domestic fuel demand, LPG compensation and the company’s ability to manage costs. Changes in government pricing policy could remain an important factor for the company’s earnings.
The key question is how much of the September-quarter profit can be sustained through regular refining and marketing operations. The company’s domestic sales growth provides a positive volume indicator, but future profitability will depend on market conditions and the timing of compensation-related receipts and accounting recognition.
Frequently Asked Questions
1. What was IOC’s net profit in Q2 FY27?
Indian Oil Corporation reported consolidated net profit of ₹22,502.62 crore in Q2 FY27, up 174.7% from ₹8,190.86 crore in Q2 FY26.
2. How much did IOC’s revenue increase in Q2 FY27?
Consolidated revenue from operations increased approximately 30% year-on-year to ₹2.68 lakh crore.
3. Why did IOC return to profitability in Q2 FY27?
The recovery was supported by improved fuel marketing margins following retail fuel price increases in May 2026, along with the recognition of government compensation related to domestic LPG under-recoveries.
4. How much LPG compensation did IOC recognise?
IOC recognised ₹7,243.02 crore as revenue from operations for instalments relating to April–September 2026.
5. How much did IOC’s domestic sales increase?
Domestic sales rose to 23.977 million tonnes in Q2 FY27, compared with 22.85 million tonnes in the corresponding quarter of the previous year.
6. What was IOC’s consolidated profit in the first half of FY27?
IOC reported consolidated net profit of ₹21,361.53 crore for April–September FY27, up approximately 42% from ₹14,998.98 crore in the first half of FY26.
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