Improving dynamics

Refining margins likely to remain healthy

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PSU OMCs Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp delivered strong performance in Q2 of FY 2026 over Q2 FY 2025, reflecting a sharp recovery in refining profitability.

Aggregate net sales of seven oil refiners rose 5% to Rs 679089 crore indicating stable product demand and healthy throughput levels despite a volatile global energy environment. The operating profit margin (OPM) rose 450 basis points (bps) to 12%, led by strong gross refining margins (GRMs), better product spreads, and improved operating efficiencies. Operating profit (OP) improved 68% to Rs 81442 crore. Profit after tax (Pat) was up 125% to Rs 37581 crore.

RIL reported a 10% increase in consolidated net sales to Rs 254623 crore, driven by robust double digit growth across its key business segments. Revenue from the digital services division rose 15%, while revenue from the retail business jumped 19%. OP rose 17.5% to Rs 45885 crore, with margins improving to 18% from 16.9%. Interest cost rose 13% to Rs 6827 crore due to operationalization of 5G spectrum assets and higher liability balances, while depreciation increased 12% to Rs 14416 crore. Net profit surged 10% to Rs 18165 crore. Capex was Rs 40010 crore.