Indian Oil shares surge 5% on strong Q2 earnings show; refining margin growth potential ahead?

Indian Oil Corporation (IOC) shares surged around 5% during the trading session on Monday, November 2, as investors focused on the government-owned oil and gas refining company’s strong Q2 FY27 financial performance, along with support from a sharp pullback in global crude oil prices.

Market experts predict that the company’s refining margins are expected to witness stronger growth in the upcoming winter season due to elevated demand. However, the elevated crude oil price overhang looms over the entire oil marketing sector.

NSE data showed that Indian Oil shares rose nearly 5% to hit an intraday high of ₹136.40 apiece on Monday’s market, in comparison to ₹130.15 apiece at the previous equity market close.

Trading activity surpassing 10.4 million equity shares across NSE and BSE combined showed elevated buying sentiment among investors amid the positive global market cue for the energy stocks.

TradingView data showed that global crude oil prices (Brent) witnessed a sharp pullback of over 2.7% intraday to $113.87 per barrel (bbl) levels on Monday’s market, in comparison to $117.10 per bbl at the previous commodity market close.

Due to the impact of the pullback in global crude oil prices, the sectoral benchmark Nifty Oil & Gas index rallied 4.1% on Monday’s market to an intraday high of 10,735.50 points, led by the gains in heavyweight stocks like Reliance, Indian Oil, BPCL, HPCL, Aegis Logistics, among others.

Lower crude oil rates ease the cost of raw material pressure on oil marketing companies (OMCs) like Indian Oil, in turn supporting the marketing margin growth on petrol and diesel sales.

However, the exact impact on the financials will depend on the sustainability of the rates in the market, along with the demand environment, which in turn has the potential to increase revenues in a particular period.

Petroleum revenue powers Q2 earnings

In its Q2 earnings, Indian Oil recorded a 174% year-on-year (YoY) growth in its consolidated net profits to ₹21,408 crore, in comparison to ₹7,818 crore in the corresponding quarter of the previous fiscal year.

The overall revenue from core operations advanced 29.8% YoY to ₹2,68,039 crore in the period under review, from ₹2,06,447 crore in the same quarter a year earlier.

India Oil’s revenue growth in the period under review was largely supported by the 28% growth in the company’s petroleum products business to more than ₹2.45 lakh crore levels in the September quarter.

Other revenue segments like the petrochemicals business (+57%) and the natural gas (+50%) also recorded healthy year-on-year (YoY) growth in the Q2 results for FY27.

IOC’s strong revenue gains powered the overall EBITDA margin growth to 10% in the September quarter, from 4.7% in the same period last year.

Refining margin growth ahead?

Analysts from the US-based investment firm Jefferies said that they expect Indian Oil’s refining margins to be strong in the upcoming winter season due to elevated demand, at a time when elevated global crude oil prices and marketing losses threaten H2 FY27 profitability.

“We expect strong refining margins through winter amid global supply disruptions and low inventories,” said Jefferies analysts after reviewing the Q2 earnings.

The investment firm also improved its outlook on the company’s stock as the key focus remains on the State-owned company’s upcoming 20 MMT (million metric tonnes) brownfield refinery expansion by December 2026.

In line with the outlook, JPMorgan analysts also said that Indian Oil is expected to complete its refinery expansions in FY27, with planned annual capex of ₹30,000-40,000 crore for the next four to five years across its refining and new ventures.

“Higher crude prices threaten near-term marketing profitability,” said JPMorgan analysts.

Stock performance

NSE data showed that in the near term, Indian Oil shares have delivered over 2% returns to investors in the past month, and have risen 2.7% in the last five sessions, as of Monday’s market.

However, the stock has lost nearly 19% of its value in the past one-year and on a year-to-date (YTD) basis in 2026. The exchange data also showed that Indian Oil shares have risen over 41% in the last three years, and over 54% in past five years.

The company’s market capitalisation (m-cap) was at over ₹1.89 lakh crore as of the trading session on Monday, November 2, 2026.