S&P Global Ratings has assigned Indian Oil Corporation (IOCL) a 'BBB' issuer credit rating with a stable outlook, reflecting IOCL’s strong market position, strategic importance to the Indian government, and sound operational profile despite challenges from market volatility and ongoing capital expenditure plans.
S&P Global Ratings recently assigned IOCL a 'BBB' issuer credit rating with a stable outlook, underscoring the company’s leadership in India’s oil refining and marketing sector and its strategic role as a government-controlled entity. IOCL, a Maharatna Central Public Sector Enterprise with significant government stake, commands the largest refining capacity in India at 80.75 million metric tonnes per annum and extensive sales of petroleum products, gas, and petrochemicals.
The rating acknowledges IOCL's diversified operations across the hydrocarbon value chain—exploration, refining, marketing, and transportation—with its refineries notably sophisticated, reflected in high Nelson Complexity Indices. While IOCL experienced moderation in financial performance in FY25 due to lower gross refining margins, LPG under-recoveries, and retail fuel price reductions, Q1FY26 saw improvements from reduced LPG under-recovery and stable retail prices amid lower crude costs.
Notable updates from the report include stable financials supported by government compensation on LPG under-recoveries, planned capital expenditures of ₹34,000-36,000 crore annually focused on refinery capacity enhancement, and expansion into renewable energy and petrochemical projects. The company maintains a comfortable financial risk profile with significant cash flows and state backing.
Important points to consider:
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IOCL enjoys strong parentage with 51.5% government ownership and strategic importance to the Indian government.
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Leadership in refining with the largest refining capacity in India and comprehensive presence across the hydrocarbon chain.
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High-quality refineries having superior processing capabilities and wide marketing/distribution network.
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Financial performance showed moderation in FY25 but improvement signs in FY26 first quarter.
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Significant ongoing capex plans including refinery upgrades, renewable energy ventures, and petrochemical projects.
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Vulnerabilities include profit exposure to volatile crack spreads and foreign exchange fluctuations and inherent regulatory risks.
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Stable outlook reflects confidence in IOCL’s market position, government support, and resilient credit profile even amid industry challenges.
S&P’s rating affirms Indian Oil Corporation’s strong commercial and strategic footing in India’s energy sector while highlighting balanced risks from market and regulatory factors.
Sources: S&P Global Ratings, CARE Ratings Ltd. report on Indian Oil Corporation, Fitch Ratings
