Benign crude to boost earnings of OMCs in Q1

STATE-OWNED OIL MARKETING companies (OMCs) are expected to post strong earnings in the first quarter of FY26, amid weak crude oil prices and improvement in refining margins, analysts say.

- ARUNIMA BHARADWAJ

Earnings in the period will also get a boost from lower LPG under recoveries due to an increase of ₹50 per cylinder in domestic LPG prices by the government.

"Q1FY26 earnings will likely benefit from lower LPG under-recoveries due to a ₹50 per cylinder domestic LPG price hike recently. The decline in propane prices as winter demand wanes provides an additional upside," said Motilal Oswal. The brokerage added that the share of Russian crude in the OMCs' portfolio is expected to rise again in Q1FY26, boosting gross refining margins. Meanwhile, the marketing segment has continued to show robust performance.

Elara Capital also anticipates that the government will allow OMCs to earn above their historical integrated margins to support energy transition capex amid weak crude oil price environment.