State-run oil marketing companies are expected to post a combined EBITDA loss of about ₹60,000-62,000 crore year-on-year in Q1FY27, as the full impact of the West Asia supply shock, elevated crude prices, weaker rupee and sharp retail fuel under-recoveries hit their profit and loss statements despite strong refining margins, according to brokerage estimates.
Dolat Capital said OMCs are likely to post an EBITDA loss of ₹60,000 crore, a decline of 301% YoY and 251% QoQ. For perspective, this exceeds 50% of HPCL’s market capitalisation.
The pressure was led by retail fuel losses. Dolat Capital said around 75% of OMC oil-product sales volumes faced under-recoveries during the quarter. Domestic LPG under-recovery is projected at ₹24,000 crore, excluding government compensation of ₹7,500 crore, and was 20% higher than the total for FY26. Gross integrated margins were negative at ₹3 per litre, against the long-term average of ₹11.5 per litre, while kerosene under-recovery stood at ₹34.4 per litre.
Equirus Securities said “1QFY27 is a quarter where March’s supply shock finally lands on P&L”, as the quarter absorbed three full months of elevated crude, record spot LNG and a weaker rupee. Brent averaged around $97 per barrel, up 25% QoQ, while Dubai crude rose 19% QoQ. Spot LNG surged to around $18/mmbtu, up 34% QoQ, and the rupee weakened 3% sequentially, compounding input-cost pressure.
Crud-Product Mismatch
Refining provided the only cushion, but it was not enough. Equirus said Singapore GRMs spiked to a record $25 per barrel, up 166% QoQ, helped by strong product cracks, with gasoil up 65%, jet fuel up 54% and gasoline up 92%. However, the marketing side broke down, with petrol marketing margins turning negative at about ₹7 per litre and diesel deepening to around ₹26 per litre.
ICICI Securities estimated that OMCs lost ₹18.9 per litre on diesel and ₹6 per litre on petrol in April-June, against positive margins of ₹8.2 per litre on diesel and ₹10.3 per litre on petrol in the year-ago quarter. The losses were driven by the mismatch between international fuel prices and largely stable domestic pump prices.
Kotak Institutional Equities said the first quarter would be impacted for all oil and gas companies due to the West Asia conflict, supply disruptions and volatile prices. It expects OMCs to report a combined PBT loss of around ₹62,000 crore, while government-estimated OMC losses stood at around ₹75,000 crore. The brokerage said April-May was “bleak” for OMCs, though sharp oil-price declines and retail price hikes at the end of May have brought back supernormal margins on petrol and diesel.
Corporate Breakdown
Company-wise, Dolat expects IOC to report an EBITDA loss of ₹25,157 crore and net loss of ₹22,441 crore. BPCL may post an EBITDA loss of ₹17,917 crore and net loss of ₹14,381 crore, while HPCL is projected to report an EBITDA loss of ₹17,070 crore and net loss of ₹14,002 crore. Equirus expects HPCL to be the worst hit because of its higher marketing-to-refining skew.
The pain is not uniform across the sector. Kotak expects RIL’s consolidated EBITDA to rise 8.4% YoY, driven by oil-to-chemicals, while ONGC and Oil India are expected to benefit from higher oil and gas realisations. GAIL is also expected to post a stronger quarter, while city gas distributors are likely to face margin pressure from high spot LNG and a weaker rupee.
JM Financial said the situation could improve if crude stays lower after the Strait of Hormuz reopening. At landed Brent of about $77 per barrel, it estimated OMCs could earn ₹13,000 crore of extra auto-fuel EBITDA per month, enough to recover ₹65,000 crore of auto-fuel under-recoveries in about five months and total under-recoveries of ₹90,000 crore, including LPG, in around seven months, assuming no change in excise duty or retail fuel prices.