Indian Oil Corporation Ltd. makes a corporate announcement

FY26’s proposed dividend payout is Rs 11,362 Crores, or 30.87% of PAT, based on a total dividend of Rs 8.25 per share. This is materially below IOC’s five-year historical average DPR of 44.40% and is the lowest payout in the FY21-FY25 series. ^{[1] [2]}

† Derived as the simple average of FY21-FY25 DPRs.

Interpretation

• FY26 DPR is 13.53 percentage points below the FY21-FY25 average.
• It is 1.13 percentage points below FY25’s 32%, continuing the recent moderation in payout.
• The lower ratio reflects the sharp increase in FY26 profitability: standalone PAT was Rs 36,802 Crores, while the proposed dividend payout was Rs 11,362 Crores. ^{[3] [1]}
• For FY26 earnings, the relevant dividend is Rs 5.00 first interim, Rs 2.00 second interim and Rs 1.25 proposed final dividend, totalling Rs 8.25 per share. ^{[4] [5] [6]}

DIPAM alignment

The commonly referenced DIPAM CPSE framework requires a minimum dividend of 30% of PAT or 5% of net worth, whichever is higher. On the PAT limb, IOC’s FY26 payout of 30.87% clears the 30% threshold by 0.87 percentage points.

However, full compliance cannot be established from the cited FY26 extracts alone, because FY26 net worth is needed to test the alternative 5%-of-net-worth requirement. Therefore, the defensible conclusion is:

• PAT threshold: met.
• Full DIPAM test: conditionally met, provided 5% of FY26 net worth does not exceed Rs 11,362 Crores and no applicable exemption applies.
• IOC separately states that its dividend declarations are in accordance with its own Dividend Distribution Policy. ^[1]

One news report cited a Rs 1.50 final dividend and Rs 8.50 total FY26 dividend, but the later official annual-report disclosure and company filing use Rs 1.25 final dividend and Rs 11,361.54 Crores total payout; the official filing basis is used here. ^{[7] [1]}

Post-dividend FCF is approximately Rs31,623.74 Crore on a consolidated FY26 basis.

Cash bridge

• Consolidated operating cash flow: Rs76,142.10 Crore ^[8]
• Less: announced total dividend payout: Rs11,361.54 Crore, including the recommended final dividend ^[1]
• Cash remaining before capex: Rs64,780.56 Crore — derived
• Less: consolidated FY26 capital expenditure: Rs33,156.82 Crore ^[9]
• FCF remaining after dividend and FY26 capex: Rs31,623.74 Crore — derived

Formula: Rs76,142.10 Crore − Rs33,156.82 Crore − Rs11,361.54 Crore = Rs31,623.74 Crore.

This indicates that FY26 operating cash generation covered both the announced dividend and reported annual capex, leaving the derived surplus above for further funding or other uses. The capex is directed across the ongoing refinery expansion and downstream integration programme, including capacity additions at Panipat, Gujarat and Barauni and greater refinery–petrochemical integration ^[10].

Important limitation: Rs31,623.74 Crore is not the total funding available for completing all remaining projects. The consolidated annual report shows Rs83,106.98 Crore of cumulative CWIP, including Rs82,487.54 Crore in projects in progress ^[11]. That is an accumulated balance-sheet amount, not a disclosed one-year cash commitment; therefore, the residual FCF cannot be treated as sufficient to fund the entire remaining project portfolio without additional future cash generation or financing.

Verdict: HPCL offered the highest FY26 dividend yield and per-share distribution, while IOC delivered the largest absolute cash payout. BPCL sat between them on yield and per-share dividend but had the lowest absolute outgo. The underlying payout ratios were broadly similar at roughly 30–33% of profit, so the sector-wide policy remains balanced rather than maximally distributive; the differences are more visible in scale, share count, capex intensity and payout timing.

†Yield figures are the market-screen figures published on 21 September 2026, so they are price-date dependent rather than intrinsic payout ratios ^[12].

What the comparison says

• IOC is the largest cash-return vehicle in absolute terms. Its Rs 11,361.54 Crores payout exceeded BPCL’s by roughly Rs 3,769 Crores and HPCL’s by roughly Rs 6,202 Crores, derived from the reported distributions ^{[1] [14] [16]}. This reflects IOC’s substantially larger equity and operating scale, not necessarily a more aggressive shareholder-return policy.
• HPCL is strongest on shareholder yield and per-share cash return. Its Rs 24.25 per-share payout was materially above BPCL’s Rs 17.50 and IOC’s Rs 8.25, while the published yield was also highest at 6.7% ^{[16] [14] [12]}. HPCL reported a 30.04% payout ratio and described the policy as balancing shareholder distributions with strategic investment ^[18].
• BPCL’s policy was more front-loaded and retention-oriented in structure. It paid two interim dividends totalling Rs 7,592.38 Crores and recommended no final dividend ^[14]. At the same time, BPCL reported FY26 group capex of Rs 21,372.47 Crores and borrowings of Rs 10,480.09 Crores, down from Rs 23,277.72 Crores a year earlier ^{[14] [14]}. This points to a greater emphasis on funding expansion and strengthening the balance sheet before any additional year-end distribution.
• The sector is not showing radically different profit-sharing ratios. HPCL reported a 30.04% payout ratio and IOC 30.87% ^{[18] [1]}. BPCL’s Rs 7,592.38 Crores dividend equates to approximately 32.58% of its standalone FY26 PAT of Rs 23,303 Crores, a derived comparison ^{[14] [19]}. Thus, the yield gap is driven partly by market prices and per-share capital structures, while the broad retention philosophy remains similar.

Analytical implication: HPCL appears relatively more oriented toward near-term shareholder yield, BPCL toward a combination of capital projects, deleveraging and interim distributions, and IOC toward balancing a large absolute payout with continued investment. The evidence supports different execution and timing priorities within a broadly comparable 30%-plus payout framework, rather than a fundamental split between “return capital” and “reinvest everything.”

One data-quality point matters: a May 2026 news report cited an IOC final dividend of Rs 1.50 and total FY26 payout of Rs 8.50 ^[7]. The later official IOC communications specify a Rs 1.25 final dividend ^[6], and the annual report reports total payout of Rs 11,361.54 Crores ^[1]; the official filings are used above.

_Scope note: this comparison also included Hindustan Petroleum Corporation Ltd. (HINDPETRO), which the answer above does not cover. Ask about any of them for a full side-by-side._