India's oil marketing companies (OMCs) are likely to report losses in the first quarter of FY2026-27 as elevated crude oil prices, a weaker rupee and inventory losses outweighed the benefit of record refining margins, according to a report by Equirus Securities.
Full impact of supply shock
The report said the June quarter is the period when the supply shock that began in March is expected to fully reflect in the financial performance of energy companies. "1QFY27 is a quarter where March's supply shock finally lands on P&L," the report stated.
According to Equirus, while the disruption during the previous quarter affected only the closing weeks, the first quarter of FY2026-27 absorbed a full three months of higher crude oil prices, rupee depreciation and record spot LNG prices.
Crude and LNG prices surge
Brent crude averaged around USD 97 per barrel, up 25 per cent quarter-on-quarter, while Dubai crude increased 19 per cent over the same period. Although crude prices fell sharply towards the end of the quarter, OMCs were left with high-cost inventory, resulting in inventory losses.
At the same time, average spot LNG prices surged to around USD 18 per mmBtu, up 34 per cent quarter-on-quarter, while Saudi propane prices rose 26 per cent. The average value of the Indian rupee also depreciated 3 per cent quarter-on-quarter, further increasing input costs.
Record refining margins fail to offset marketing losses
Despite these challenges, refining margins remained strong. The report said Singapore Gross Refining Margins (GRMs) rose to a record around USD 25 per barrel, up 166 per cent quarter-on-quarter, supported by strong distillate cracks. Gasoil cracks increased 65 per cent, jet fuel cracks rose 54 per cent, while gasoline cracks jumped 92 per cent.
However, the report noted that the gains from refining were more than offset by weak fuel marketing performance. Petrol marketing margins turned negative at around Rs -7 per litre, while diesel marketing margins declined further to around Rs -26 per litre. It stated: "But marketing side broke down: petrol marketing margins turned negative at Rs -7/lit and diesel deepened to Rs -26/lit."
Expected losses for OMCs
As a result, Equirus expects all three state-run OMCs to report losses during the quarter. Among them, Hindustan Petroleum Corporation Ltd (HPCL) is expected to be the worst affected, with an estimated EBITDA loss of around Rs 162 billion, reflecting its higher dependence on fuel marketing. Indian Oil Corporation (IOC) is expected to report an EBITDA loss of around Rs 135 billion, while Bharat Petroleum Corporation Ltd (BPCL) is likely to post an EBITDA loss of around Rs 109 billion.
The report added that the LPG compensation instalments announced earlier would provide only partial relief to the companies' overall earnings.
