Shares of Indian Oil Corporation Ltd (IOCL) are at the center of a sharp divide among domestic brokerage firms following its Q4FY25 earnings report. While some analysts see strong upside potential, others remain cautious, citing structural concerns around refining margins and petrochemical segments.
Indian Oil reported a 50% year-on-year (YoY) increase in standalone net profit at ₹7,265 crore for the March 2025 quarter, driven by inventory gains and solid domestic sales. However, revenue from operations dipped slightly to ₹2.18 lakh crore compared to the same period last year. The company’s gross refining margin (GRM) stood at $7.85 per barrel, and the refinery throughput reached 18.548 million metric tonnes (MMT) for the quarter. IOCL also announced a final dividend of ₹3 per equity share for FY25.
Despite a 17.4% YoY decline in IOCL’s stock—factoring in weak GRMs and LPG losses—Nirmal Bang Institutional Equities upgraded the stock to ‘Buy’ from ‘Hold’, setting a target price of ₹173. The brokerage firm cited healthy marketing margins, expected revival in refining due to global demand recovery, and benefits from three expansion projects that are expected to boost output by FY27. It also noted long-term growth potential from the ramp-up of city gas distribution (CGD) networks, where six out of 26 areas are already EBITDA-positive.
Echoing optimism, Elara Capital maintained a bullish stance, projecting a 50% upside and raising the target price to ₹214. Elara emphasized that weak international crude prices improve OMCs’ gross margins by around ₹3.5 per liter, even after the recent ₹2/liter excise duty hike. With expectations of zero LPG losses in FY26 and above-historical integrated margins, the brokerage believes IOCL is well-positioned to fund its energy transition goals. It further increased IOCL’s FY26E and FY27E EPS estimates by 48% and 44%, respectively.
On the flip side, Nuvama Institutional Equities remains cautious, assigning a ‘Reduce’ rating with a target of ₹123, implying a potential 18% downside. Despite Q4 results exceeding expectations, Nuvama flagged concerns over weakening GRMs (down 60% YoY), the shrinking share of Russian crude (down to 14% in Q4), and the lack of clarity on LPG subsidy support. They also believe IOCL’s elevated capex guidance for FY26 could weigh on return on capital employed (RoCE).
HDFC Securities also retained a ‘Reduce’ rating, setting a target of ₹128, based on anticipated margin pressures from increasing petrochemical capacity and subdued auto fuel marketing margins. Although Q4 EBITDA and adjusted PAT at ₹13,600 crore and ₹7,300 crore, respectively, came in above estimates, the brokerage flagged structural weaknesses that could impact future earnings.
As of Monday, IOCL’s shares jumped 4.4% to ₹149.70, pushing its market capitalization above ₹2.10 lakh crore. The stock has recovered over 35% from its 52-week low of ₹110.75, hit just two months ago. The split in analyst sentiment reflects the complex interplay of macroeconomic factors, global crude trends, and government policy, keeping IOCL’s near-term stock trajectory a topic of active debate in financial circles.
