OMCs Likely to Report Strong Q1 on Improved Marketing Margins

Upstream firms may see q-o-q fall in realisations on lower crude prices

- Arunima Bharadwaj

State-owned oil marketing companies (OMCs) are expected to report a strong beginning to FY26 driven by robust marketing margins in the first quarter, according to analysts.

According to Emkay Global Financial Services, petrol marketing margins of OMCs grew 28% quarter-on-quarter (q-o-q) to ₹12.8 per litre in Q1FY26, while diesel margins jumped to ₹9.2/litre from ₹5.1/litre, on account of lower crude oil prices amid frozen retail prices.

"Brent averaged at around $68/barrel in Q1FY26, 10% lower q-o-q, and recorded a weak close at $68/bbl, down by $9/bbl between the two quarter ends. This decline is expected to result in refining inventory losses of $1.5-2/bbl each for BPCL and HPCL, while IOCL could face a higher inventory loss of $2.5/bbl due to a relatively longer inventory cycle," Emkay Global Financial Services said in its quarterly preview.

While Prabhudas Liladher Capital expects sales of OMCs to decline by 5% year-on-year led by lower oil prices, it believes that expansion in marketing margins is likely to result in the companies reporting a staggering 122% rise in EBITDA in Q1FY26.