Indian Oil shares may continue to gain if oil prices go down further

Indian Oil shares (IOL) are gaining today. At 3:10 p.m. IST, Indian Oil’s shares are up by 1.80 %, trading at Rs 173.10. This is almost at its current 52-week high price of Rs 173.49. Nifty 50 index is up by 0.45% at this time.

Stock price has got a boost from Indian Oil’s September quarter result

Indian oil shares have gained 2.75% in the past 5 days. The stock got a boost from the company’s September quarter result. The company posted consolidated profit of Rs 7,817.55 crore in the September quarter. In the September quarter of the previous year, it had posted a loss of Rs 169.58 crore. On a quarter-on-quarter basis, its profit increased by 14.7%.

Gross refining margin of Indian oil up because of lower crude oil prices

Indian Oil is into refining and marketing of oil & gas products. Lower crude oil prices are therefore highly favorable for the company. This can be seen from the fact that in September 2025 its gross refining margin on every barrel of crude oil that it processed was $19.6 per barrel. In the corresponding quarter of the previous year, this was just $1.51 per barrel. In June 2025 quarter it was $2.15 per barrel. Gross refining margin is the difference between the price at which Indian oil sells refined oil products (petrol, diesel, ATF etc.) and the cost at which it buys crude oil.

The fact that it was able to buy crude oil at even cheaper prices from Russia gave a shot to its gross refining margin. But the company has now stopped buying crude oil from Russia after US imposed additional 25% tariff on India for buying Russian oil.

Crude oil prices have fallen by more than 14% in the past 1 year

In the past 1 year, crude oil prices have gone down by more than 14%. This has given a boost to the gross refining margin and profitability of the company. Brent crude oil for December delivery is currently trading at around $64.29 per barrel. WTI crude is trading at around $60.33 per barrel.

Crude oil prices may go down further in the foreseeable future

The higher US tariffs will definitely exacerbate the global economic slowdown in the foreseeable future. This will further reduce demand for oil. OPEC + has increased supply in the past few months. This in order to recapture market share lost to crude oil coming from United States. OPEC+ has said that it will increase crude oil supply by $137,000 per barrel in December. But then it will not increase its oil supply in the first three months of 2026.

IOL shares have outperformed this year

There is therefore a high probability that crude oil prices may go down further in the near term. If this happens then IOL shares may gain further. Year-to-date in 2025, Indian Oil shares have gained 26.31%. Nifty 50 index has gained 8.22% in this period. The stock has outperformed the Nifty 50 index by around 18% this year. Nifty Oil & Gas index has gained 11.60% year-to-date in 2025. Indian Oil shares have outperformed the benchmark Nifty Oil & Gas index by more than 13% this year.

Indian Oil shares are currently trading at a price-to-earnings (P/E) ratio of 9.59. Average P/E ratio at which stocks in Nifty Oil & Gas index are currently trading is 11.84. That makes Indian Oil shares relatively undervalued.

Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest.

Source: NSE, Indian Oil