OMC Stocks in Focus: Crude Prices, LPG Costs and Q1FY27 Trends | PL Capital
- 8th July 2026
- 10:00 AM
- 2 min read
Summary
Oil marketing companies are likely to face a weak June quarter as elevated crude costs, export duties and LPG under-recoveries weigh on profitability, even as refining cracks stay elevated, according to PL Capital Research.Mumbai | July 8, 2026
Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are expected to face a difficult Q1FY27, as sector-wide cost pressures outweigh stronger global refining margins.
What Is Driving the Earnings Pressure?
Special additional excise duty on exports of petrol, diesel and jet fuel remained in place through the quarter, limiting the ability of oil marketing companies to benefit from stronger international refining cracks. Retail fuel price hikes of around Rs 7.5 a litre in May 2026 lagged the rise in crude procurement costs. A Rs 10 a litre excise duty cut and the government’s cap on domestic refinery transfer prices for petrol and diesel provided some offsetting relief.
How Are Crude Prices and LPG Costs Behaving?
Brent crude averaged USD 96.9 a barrel in Q1FY27, against USD 77.9 a barrel in Q4FY26, as prices peaked amid the US-Iran conflict before easing toward the end of the quarter. LPG under-recoveries rose sharply during the quarter as Saudi CP prices for butane and propane climbed 51.3% and 39.9% quarter on quarter, respectively, keeping pressure on marketing economics even after price hikes.
Outlook
With crude prices softening toward the end of the quarter, the likelihood of fresh windfall taxes on upstream producers appears limited, which should support earnings at upstream companies such as ONGC and Oil India even as oil marketing companies remain under pressure. FY27 earnings estimates for the sector have been revised downward to reflect the weak quarter, while FY28 estimates remain largely unchanged.
Read the full PL Capital Research report: https://plindia.com/ResReport/OilGas-8-7-26-PL.pdf
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