India’s three state-run fuel retailers earned a combined net profit of Rs 30,106 crore in the July-September quarter. This gain came despite losses on fuel sales and unpaid LPG subsidies. High refining margins helped these companies, as IOC Director Anuj Jain said, "under-recoveries on LPG were Rs 184 per cylinder."

India's three state-run fuel retailers earned a combined standalone net profit of Rs 30,106 crore in the July-September quarter, nearly 39 per cent of their annual earnings, after a refining margin boost and inventory gains helped more than offset losses on fuel sales and a mounting unpaid LPG subsidy bill.

The combined profit of Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) is 68.3 per cent more than their earnings in the same period last year and a swing from a combined loss of about Rs 18,150 crore in the previous April-June quarter, according to company filings.

The July-September quarter alone equals about 39 per cent of the three companies' combined FY26 (April 2025 to March 2026 financial year) profit of Rs 77,281 crore.

The boost in earnings came despite petrol and diesel prices remaining on freeze since May and unchanged domestic LPG rates since March, despite a surge in benchmark prices and input crude oil rates.

The three companies were till last month losing Rs 4-5 a litre on petrol and Rs 18-20 on diesel, industry sources said.

IOC Director (Finance) Anuj Jain at an investor call on Saturday said under-recoveries or losses on LPG were Rs 184 per cylinder in September, which rose to Rs 229 in October and are expected to further go up to Rs 309 in November and Rs 370 per cylinder in December.

While petrol and diesel prices are deregulated and any loss has to be borne by the companies, LPG continues to be a regulated commodity with the government expected to make good on the difference between retail price and actual cost.

With government subsidies not coming in time, the three companies accumulated under-recoveries on fuel totalling Rs 67,900 crore at the end of September, according to the filings.

IOC reported Rs 32,505.69 crore of under-recovery, BPCL Rs 17,334.40 crore and HPCL Rs 18,048.82 crore.

The earnings boost was primarily because of high refining margins and inventory gains.

IOC accounted for the bulk of the September-quarter earnings, reporting its highest-ever standalone quarterly net profit of Rs 21,630 crore, almost three times the Rs 7,610 crore recorded a year earlier. The figure alone represented nearly 59 pr cent of the company's full-year FY26 profit of Rs 36,802 crore.

In contrast, BPCL's standalone net profit fell 22.5 per cent year-on-year to Rs 4,993 crore, while HPCL's profit declined 9 per cent to Rs 3,483 crore. Both companies had reported substantially higher profits in the year-ago quarter.

The divergent performance highlights how refining gains and earnings from other businesses have benefited the state-run companies unevenly, while their fuel retail operations remain exposed to the gap between international product prices and government-influenced domestic pump rates.

IOC attributed its record performance to improved refining margins and strong contributions from its petrochemical and gas businesses. A temporary decline in crude oil prices between mid-June and mid-August also supported earnings by lowering feedstock costs and leading to an inventory gain of about Rs 7,000 crore.

The strong refining environment appeared in the results of BPCL and HPCL.

HPCL earned USD 32.15 for turning every barrel of crude oil into fuels like petrol and diesel in the September quarter, compared to USD 8.80 a barrel gross refining margin a year earlier. BPCL's GRM rose to USD 32.53 per barrel from USD 10.78.

The earnings come against the backdrop of a difficult first quarter, when the three companies suffered heavy losses as crude prices surged above USD 100 a barrel amid the West Asia conflict, and retail fuel prices were slow to adjust.

The subsequent improvement in refining economics and lower crude prices during part of the September quarter helped restore profitability, but the recovery was uneven.

While oil prices eased in Q2, they firmed up in October, industry sources said.

In its Q2 earnings statement, IOC flagged potential pressure on earnings in the coming quarters, saying, "However, the profitability in upcoming quarters may be adversely impacted by inventory losses due to a potential fall in crude oil prices with normalisation of the situation in the Middle East".