IOC Share Price Hits 52-Week High After 42x Jump in Q2 Profit — Should You Buy?

On Tuesday, the stocks of Indian Oil Corporation (IOC) reached a new 52-week high of ₹157.50, which was a 1.5% increase, maintaining their positive trend after the oil PSU gave a huge 42-fold increase in net profit for the quarter of September (Q2 FY26).

IOC Q2 Results: Profit Soars 4,128% YoY

The Maharatna PSU posted a net profit of ₹7,610 crore for Q2 FY26, compared to just ₹180 crore in the same period last year — a 4,128% year-on-year rise.

According to IOC Chairman Arvinder Singh Sahney, the record-breaking profit was driven by operational efficiencies and six-quarter high refining margins.

Revenue from operations rose 4% YoY to ₹2,02,992.34 crore, up from ₹1,95,148.9 crore in Q2 FY25. The company also benefited from inventory gains after a year of losses, further boosting profitability.

Beating Street Estimates

IOC's standalone EBITDA amounted to ₹14,600 crore, which was significantly above ₹10,600 crore estimated by JM Financial and ₹13,400 crore which was the consensus estimate.

This stellar performance was backed by a gross refining margin (GRM) of USD 10.7 per barrel, which was a huge surprise compared to estimates of USD 6.5 per barrel.

Profit after tax (PAT) also exceeded expectations—₹7,600 crore versus JM Financial's ₹4,100 crore estimate.

Government Compensation Boost Ahead

In a positive development, the Ministry of Petroleum and Natural Gas (MoPNG) approved a ₹14,490 crore compensation for IOC to offset LPG under-recoveries for FY25–FY26.

The amount — part of a ₹30,000 crore package for all oil marketing companies — will be disbursed in 12 equal monthly instalments starting November 2025.

Although IOC did not record this compensation in Q2, it will start recognizing it from Q3 FY26, potentially strengthening its bottom line in the coming quarters.

Brokerage Views: Valuation Concerns Remain

Despite the strong results, JM Financial maintained a ‘Reduce’ rating on IOC stock with a target price of ₹145, citing valuation concerns. The brokerage noted that IOC trades at 0.97x FY27 PB, slightly above its three-year average of 0.9x.

However, it expects strong earnings growth in FY27–28, driven by a 25% refining capacity expansion (18 MMT per annum) within the next 12 months.

Similarly, Motilal Oswal Financial Services retained a ‘Neutral’ rating, noting that while Q2 performance exceeded expectations, valuation upside appears limited in the short term.

Outlook: Strong Fundamentals, Limited Upside

The fundamentals of IOC seem strong with the refining margins at multi-quarter highs, the inventory gains coming back and the government support expected in the near future. Nevertheless, per the analysts, the stock's fast rise and the high valuations might restrict the short-term profits.

Long-term investors may start to accumulate shares on dips, as IOC keeps on increasing its refining and petrochemical capacities.