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In Q2FY27, CPCL’s revenue was below CIE estimate by 17% at INR 206 Bn, while EBITDA was below by 12% at INR 32 Bn (CIE estimate of 15,670 Mn) and adjusted PAT reached INR 9,928 Mn (CIE estimate of 36 Bn). Concurrently, the global middle distillate market faces a severe supply squeeze driven by geopolitical chokepoints, depleted hub inventories and Russian export constraints. With Chinese teapot rationalisation, ageing infrastructure and inelastic demand, diesel crack spreads will remain structurally elevated through FY27. We have revised our FY27E/28E for Revenue, EBITDA, PAT by - 10%/-6%, 1%-3%, -3%/-12% respectively, as we now better product cracks while simultaneously reduce the throughput in line with maintenance cycle for FY27 and FY28. On the strength of the above, we maintain our TP to INR 1,885/sh and a ‘BUY’ rating on the stock.

Revenue, EBITDA, PAT below CIE estimates, largely driven by lower throughput

* Revenue for Q2FY27 was up by 25.9% YoY & down by 24.9% QoQ at INR 205.6 Bn (vs CIE est. INR 247.2 Bn)

* Company reported GRM USD 20.41/b that includes inventory gain on crude & products of USD 3.82/b, implying core GRM of USD16.59 (vs CIE est of USD18.03/b)

* EBIDTA for Q2FY27 was up by 179.7% YoY & up by 105.9% QoQ at INR 32.0 Bn (vs CIE est. INR 36.3 Bn). The EBITDA Margin stood at 15.6%, up by 856 bps YoY (vs CIE est. of 14.7%)

* Adjusted PAT for Q2FY27 was up by 212.4% YoY & up by 126.3% QoQ at INR 22.5 Bn (vs CIE est. INR 26.3 Bn).

Diesel Tightness Fuels CPCL’s Margin Upside

Global middle-distillate markets remain structurally tight, supported by persistent European supply deficits, reduced Middle Eastern refinery throughput, constrained Russian output and depleted inventories across major trading hubs. Despite US distillate production reaching maximum potential, robust export demand from Europe and South America continues to draw down domestic inventories. Meanwhile, rationalisation of China’s independent refining capacity, ageing global refining infrastructure and recurring unplanned outages have further restricted supply flexibility. With inventories across Europe and Singapore approaching minimum operational levels, the market remains increasingly vulnerable to additional disruptions. Furthermore, ongoing seasonal refinery maintenance ahead of winter demand is likely to constrain inventory replenishment. Given relatively price-inelastic demand from transportation, agriculture and industrial activity, we expect diesel cracks to remain elevated through FY27, sustaining attractive refining economics. Against this backdrop, CPCL remains well positioned to capitalise on persistent middle-distillate shortages, supported by its diesel-heavy product slate and the resulting potential for stronger core GRMs and profitability.

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