By Sethuraman N R and Nidhi Verma
BENGALURU (Reuters) - Indian Oil Corp Ltd, the country's top refiner, reported an eleven-fold rise in second-quarter profit on Friday that beat analysts' estimates on higher inventory gains and a jump in refinery margins.
The company, along with subsidiary Chennai Petroleum, controls about a third of the country's 5 million-barrels-per-day (bpd) refining capacity.
Net profit for the state-owned company rose to 62.27 billion rupees ($842.14 million) in the three months ended Sept. 30, from 5.63 billion rupees a year earlier.
Analysts on average had expected a profit of 28.20 billion rupees, according to Refinitiv data.
IOC's inventory gains in the September quarter were at 74 billion rupees against an inventory loss of 18.07 billion rupees a year earlier, Chairman S. M. Vaidya told a news conference.
Refiners buy crude oil and process it after a gap of 45-60 days. An inventory gain is booked when oil prices rise by the time the company refines the crude and sell the fuels.
Brent crude price fell 0.5% during the July-September quarter, after rising 81% in the previous quarter.
Gross refining margin, the difference between the cost of crude procurement and the prices of refined products, during the second quarter averaged $8.62 per barrel from $1.28 per barrel a year ago.
Fuel margins recovered after COVID-19 lockdown hammered fuel demand and squeezed margins in the previous quarter.
Vaidya said IOC is operating its refineries at about 95% capacity and hopes to run them at 100% rate in 2-3 months when the fuel demand is also expected to rise to pre-COVID-19 levels. [O/INDIA1] [O/INDIA2]
IOC, which aims to spend 262.3 billion rupees in 2020-21, also approved 50 billion rupee worth projects, including setting up of a polybutadine rubber project at its Panipat refinery, setting up of a jetty and marginal expansion in its Bongaigaon refinery.
(Reporting by Nallur Sethuraman in Bengaluru and Nidhi Verma in Delhi; Editing by Rashmi Aich)