Oil & Gas – Apr-Jun’26 Earnings Preview – A washout quarter for OMCs

Q1FY27 performance is expected to remain weak as the quarter fully captures the impact of the US-Iran conflict. While aggregate sales are expected to increase 11.1% QoQ and 23.6% YoY, EBITDA is likely to decline 72.3% QoQ and 68.8% YoY, led by OMCs. The sector is expected to report net loss of INR72.9bn vs. profit of INR542.8bn/INR554.8bn in Q4FY26/Q1FY26. Although upstream companies are expected to benefit from higher crude realizations, restoration of royalty rates is likely to partially offset the improvement in profitability. Upstream sector is expected to report 38.9%/48.9% YoY growth in sales/EBITDA. Standalone refiners are expected to benefit from stronger product cracks; however, SAED and capping of domestic refinery transfer prices (RTP) are likely to restrict improvement in earnings. MRPL is expected to report 73.9% YoY revenue growth, while EBITDA is likely to increase to INR10.9bn from INR1.8bn in Q1FY26. Higher MS and HSD under-recoveries are expected to wipe out OMC profitability. CGDs are also expected to remain under pressure as higher input costs outweigh the price hikes implemented to mitigate costs. EBITDA/PAT for CGDs (IGL, MGL) are expected to decline 45.4%/48.1% YoY. Meanwhile, RIL's standalone EBITDA is expected to remain broadly flat QoQ at INR119.6bn, while its Digital and Retail businesses are expected to see ~3.6% and flat QoQ growth, respectively. Our top picks remain RIL, MGL and IGL.