Brokerage firm Prabhudas Lilladher has upgraded Indian Oil Corporation to 'Accumulate' with a revised price target of ₹147. This change follows strong core refining margins in the first quarter of fiscal year 2027 and expectations of continued government support. Investors should note that despite improved operating performance, the company reported a net loss for the quarter.
Prabhudas Lilladher has shifted its outlook on Indian Oil Corporation (IOC) from 'Reduce' to 'Accumulate', citing improved operational metrics. The brokerage's report highlights that the company achieved a robust core gross refining margin (GRM) of $19.1 per barrel during the first quarter of fiscal year 2027. This core margin calculation accounts for the impact of the Special Additional Excise Duty (SAED) and excludes inventory-related losses.
Operational Performance and Refining Trends
The company’s refining segment showed significant progress during the quarter, with the net SAED GRM rising to $15.6 per barrel, compared to $2.2 per barrel in the same quarter last year. While the business benefited from a finished goods inventory gain of ₹150 billion, this was partially offset by crude inventory losses. The standalone EBITDA for the quarter was reported at ₹20.2 billion. Despite these operational gains, Indian Oil reported a net loss of ₹26.6 billion for the quarter, though this figure was lower than many market expectations.
Looking ahead, the company is managing LPG under-recoveries, which are estimated to be around ₹250 per cylinder for the second quarter of fiscal year 2027. Management has reaffirmed its capital spending guidance of ₹327 billion for the current fiscal year. The company is actively expanding its refining capacity, with planned throughput targets of 77 million metric tonnes in FY27, projected to rise to 90 million metric tonnes by FY29 as new projects come online.
Valuation and Future Monitorables
The brokerage revised its valuation multiple for the stock to 0.8 times the estimated FY28 price-to-book value, up from 0.7 times. This adjustment supports the new price target of ₹147. For investors, the primary monitorables remain the actual realization of refining margins and the progress of refinery capacity expansions. While government support for under-recoveries remains a key factor in financial stability, the company’s ability to navigate volatile crude prices and manage the heavy capital spending pipeline will dictate its future profitability. Investors may track upcoming quarterly results to see if the core margin strength persists against shifts in global oil prices and domestic regulatory policies.