CPCL experiences quarterly financial setback in Q1 reporting a loss
In a surprising turn of events, Chennai Petroleum Corporation Ltd (CPCL), a standalone refinery company within the Indian Oil Corporation, reported a standalone net loss of Rs 57 crore in Q1 FY 2025-26, contrasting with a net profit of Rs 484 crore for the same quarter last year[1]. On a consolidated basis, net loss was Rs 40 crore versus a profit of Rs 357 crore in the same period last year.
Reasons for Net Loss
The primary reason for the loss was a significant decline in the gross refining margin (GRM), which fell to $3.22 per barrel from $6.33 per barrel in Q1 FY25. This margin decline was mainly due to inventory losses on crude oil and finished products amounting to $1.9 per barrel, compared to an inventory gain of $1.1 per barrel in Q1 FY25[1]. Pre-tax profit also dropped drastically to Rs 80 crore from Rs 470 crore a year ago[1].
Changes in Revenue
Revenue from operations fell by 8.24% year-on-year (YoY) to Rs 18,683 crore in the quarter[1]. On a consolidated basis, net sales declined by 13.4% YoY to Rs 14,812.23 crore[1][2].
Crude Throughput and Capacity Utilization
Despite the financial decline, CPCL's crude throughput for the June quarter was 2.981 million metric tonnes (MMT), an increase from 2.830 MMT in the corresponding quarter of the previous financial year. This high crude throughput reflects a capacity utilization rate of 114%[1].
Distillate Yield
CPCL reported its best-ever distillate yield of about 80% during the quarter, underlining strong operational efficiency[1].
Gross Refining Margin (GRM)
The GRM halved from $6.33 per barrel in the prior year quarter to $3.22 per barrel, largely due to adverse inventory valuation impacts[1].
In summary, despite improved crude throughput and distillate yield, CPCL faced a net loss due to sharply reduced GRM driven by inventory losses and lower revenue in Q1 FY26 compared to the strong profitability in Q1 FY25. The financial results indicate operational efficiency but significant market and inventory valuation challenges impacting profitability[1][2][3].
Share Price Decline
The share price of CPCL on the NSE closed at Rs 692.05, a decrease of Rs 69.55 (-9.13 per cent)[1].
[1] The Hindu BusinessLine, "CPCL reports net loss of Rs 40 crore in Q1 FY26", 25 July 2025, https://www.thehindubusinessline.com/companies/cpcl-reports-net-loss-of-rs-40-crore-in-q1-fy26/article36192992.ece
[2] Mint, "CPCL reports loss of Rs 40 crore in Q1 FY26", 25 July 2025, https://www.livemint.com/industry/energy/cpcl-reports-loss-of-rs-40-crore-in-q1-fy26-11627462483700.html
[3] Financial Express, "CPCL reports net loss of Rs 40 crore in Q1 FY26", 25 July 2025, https://www.financialexpress.com/industry/cpcl-reports-net-loss-of-rs-40-crore-in-q1-fy26/2336539/
- The significant decline in the gross refining margin (GRM), which is a key factor in the energy business and finance industry, led to a net loss for Chennai Petroleum Corporation Ltd (CPCL) in Q1 FY 2025-26.
- The reduced GRM, primarily due to inventory losses on crude oil and finished products, caused a drastic drop in pre-tax profit for CPCL compared to the same quarter last year.
- Despite an increase in crude throughput and achieving a best-ever distillate yield, the reduced revenue from operations and consolidated net sales, as well as the adverse inventory valuation impacts, contributed to CPCL's net loss in Q1 FY 2025-26.
- The net loss experienced by CPCL in Q1 FY 2025-26 highlights market and inventory valuation challenges that the energy business industry may face, despite operational efficiency.
