CLSA has raised its target price on Indian Oil Corporation (IOC) to ₹135 from ₹120, while maintaining a ‘Hold’ rating, after the oil major delivered a strong Q4FY25 earnings beat driven by better-than-expected refining margins and supernormal marketing profitability.
IOC reported a net profit of ₹7,265 crore in Q4, up sharply from ₹2,874 crore in the previous quarter. EBITDA jumped 91% sequentially to ₹13,572 crore, as both the refining and marketing segments outperformed expectations. Total revenue remained broadly flat at ₹1.95 lakh crore, and EBITDA margins expanded to 7% from 3.7% QoQ.
According to CLSA, the result was a comprehensive beat on all key metrics. Even as the government raised excise duty on auto fuels, public sector oil marketing companies like IOC were able to maintain supernormal marketing margins, particularly on petrol and diesel. This trend was instrumental in lifting operating profitability for the quarter.
The brokerage now expects IOC to maintain healthy earnings momentum in FY26 and FY27. As a result, it has raised earnings estimates by 4–9%, incorporating higher marketing margins as the key upside driver.
That said, CLSA retained a neutral stance on the stock, highlighting that the benefits from high margins may not be structurally sustainable, especially if regulatory pricing intervention returns or crude oil volatility intensifies. The brokerage believes the recent rally has priced in most of the earnings surprise, and a further re-rating would require sustained capital efficiency and diversification gains.
Disclaimer: The above views are those of the brokerage and not the publication. Investors are advised to consult a certified financial advisor before making investment decisions.
