IOC shares climb 3% post Q2 results; analysts mixed on OMC stock's prospects

Indian Oil Corporation Ltd (IOC) reported a stronger-than-expected September quarter performance, driven by robust marketing and refining margins and lower operating expenses. While results exceeded analysts’ estimates, brokerage opinions remain largely neutral to positive on the stock.

On Wednesday, the stock rose 2.7 per cent to hit a high of Rs 158.65 apiece. Emkay Global noted that IOC’s Q2FY26 Ebitda and profit beat its estimates by 28 per cent and 52 per cent, respectively, on account of better refining margins and reduced opex. The oil marketing company's core GRM stood at $8.9 a barrel, surpassing Emkay’s estimate of $7 per barrel, while blended marketing margins were largely in line.LPG under-recoveries fell 43 per cent YoY and are expected to decline further with the fall in Saudi CP.

IOC’s share of the LPG subsidy stands at Rs 14,500 crore (out of the total Rs 30,000 crore) and will be disbursed in 12 EMIs of Rs 1,200 crore each, starting November 2025.

Antique Stock Broking said pending under-recoveries will likely be offset through future payments or over-recoveries, with part of this inflow already reflected in its FY27 Ebitda forecast.

“We raise our FY26 Ebitda estimate by 4.1 per cent post the Q2 beat, while trimming FY27/28 estimates by 1 per cent each on lower throughput assumptions as capacity ramp-ups phase in gradually. Maintain BUY with a revised target of Rs 193, based on 6x EV/Ebitda on 1HFY28E,” it said.

Emkay Global said major expansion projects in Panipat, Gujarat, Barauni are on track for commissioning by Q1/Q2FY27, while petchem projects are progressing well, with the PX-PTA unit expected by Q3FY27 and the Panipat PBR unit by June 2026.

For H1FY26, IOC's  capex stood at Rs 15,900 crore, with the FY26 target at Rs 33,500 crore. "We raise FY26E/27E/28E EPS by 13–18 per cent, factoring in stronger margins amid a favourable macro backdrop, and increase our target by 12 per cent to Rs 190, rolling over to Sep-27E; retain Buy,” Emkay said.

HDFC Institutional Equities maintained a ‘Reduce’ rating on IOC with a target price of Rs 150, citing pressure from rising petrochemical supply and moderating auto-fuel marketing margins. The brokerage noted that IOC’s Q2FY26 Ebitda of roughly Rs 14,600 crore and adjusted profit of Rs 7,600 crore came in below its expectations due to weaker-than-expected refining margins and marketing volumes.

Motilal Oswal Financial Services (MOFSL) also highlighted that it prefers HPCL over IOCL for three reasons: 1) higher exposure to marketing, 2) a superior dividend yield as HPCL’s capex cycle tapers off while IOC’s remains elevated, and 3) upcoming project start-ups at HPCL that could boost earnings.

MOFSL valued IOC at 1 time FY27E consolidated P/B, in line with its 10-year average, and set a target price of Rs 152.