Earning before interest , taxes, depreciation and ammortisation (EBITDA ) of oil marketing companies (OMCs) is expected to be strong in Q4FY26 due to inventory gains and core gross refining margins (GRMs).
However, on quarterly basis, they are expected to be down on a high base, brokerages have said.
“OMCs’ Q4FY26 EBITDA to be robust due to strong crude inventory gains and core GRM, though it might still be down 7-14% QoQ on a high base and due to lower auto-fuel GMM and jump in LPG UR, despite Rs 7500 crore LPG cash compensation for earlier losses,” JM Financial said in a report.
OMCs’ 4QFY26 core GRM is likely to remain strong QoQ at $ 11.4–13.4/bbl ($ 10.1–14.2/bbl in Q3FY26) led by ~16% QoQ rise in diesel cracks. Furthermore, there could be crude inventory gain of $ 5.0–7.5/bbl in 4QFY26 (minimal inventory loss of $ 0.9–1.3/bbl in 3QFY26), the brokerage said , adding they expect reported GRM at $ 16.4–18.9/bbl ($ 8.9–13.3/bbl in Q3FY26).
Marketing Margin Compression
Equirus Securities said the quarter reflects sharp rise in crude with Brent up 23% qoq and strong refining spreads wih Singapore GRM up 60% qoq, supporting refining along with inventory gains, while marketing margins collapse (petrol –80%, diesel negative) weighs heavily on profitability.
“Elevated product cracks (gasoline up 26%, gasoil up43%, jet up 61%) aid GRMs, but higher crude and weak retail pricing compress marketing earnings, leading to overall EBITDA decline (–25–70% qoq),” it said. IOC is relatively better placed while HPCL is the worst hit with maximum marketing losses expected”, it added .
Reliance Industries (RIL) is expected to deliver a relatively stable performance. Consolidated EBITDA is projected to decline marginally. O2C segment benefits from strong refining tailwinds, though this is partly offset by weaker petchem spreads and losses in fuel retailing, Equirus said. Oil & Gas remains stable with modest production decline. Jio continues to see steady growth in subscribers and ARPU, while retail is expected to post mid-single digit growth, it said.
Motilal Oswal expects that RIL’s consolidated EBITDA expected to grow 11% YoY to Rs 48400 crore . It estimated EBITDA of Rs 18100 crore (up 20% YoY) for the standalone business, Rs 18100 crore (up 14% YoY) for RJio, and Rs 6300 crore (down 2% YoY) for the retail business.Motilal said standalone EBITDA for HPCL/BPCL/IOCL is expected to decrease 22-35% QoQ, due to weak marketing performance. Singapore GRM averaged $8.2/bbl in 4Q (vs. $7.5/bbl in 3Q), while MS/HSD marketing margins were down significantly QoQ.
“OMC performance is likely to be boosted by refining and marketing inventory gains, while MS/HSD under-recovery is largely expected to flow through in 1QFY27,” it said
Upstream Resurgence
ONGC ‘s standalone EBITDA is expected to raise 36% and OIl India ‘s EBITDA is set to increase 16% led by 28% QoQ jump in Brent due to ongoing ME supply jundisruption, JM Financial said
“ONGC’s and Oil India’s net crude realisation could jump ~28% QoQ to $ 78–79/bbl in 4QFY26, in line with the change in Brent crude price (Brent averaged higher at $ 81/bbl in 4QFY26 due to ongoing ME supply disruption, versus $ 63.7/bbl in 3QFY26),” the brokerage said.
Further, ONGC’s and Oil India’s gas realisations could be flat QoQ as a slight decline in average domestic APM gas price to ~$6.4/mmbtu in 4QFY26 ($ 6.6/mmbtu in 3QFY26) could be largely offset by a gradual increase in quantum of APM gas being reclassified as New Well Gas (NWG) for ONGC, which fetches higher realisation (of 12% of Brent, without any ceiling price)., it said .
However, crude sales volume is likely to decrease 3% QoQ for ONGC, whereas it may increase 1.3% QoQ for Oil India; meanwhile, gas sales volume is likely to dip 2.3%/7.1% QoQ for ONGC/Oil India. Hence, we believe ONGC’s EBITDA/PAT would rise 16%/17% QoQ and Oil India’s EBITDA/PAT could increase 36%/38% QoQ on a low base of 3QFY26, impacted by sharp jump in contract cost and dry well-write offs, it said.