OMC Earnings Outlook: Under-Recoveries and Excise Risks to Weigh on Profits

Oil Marketing Companies (OMCs) in India are bracing for a challenging fiscal period, with profitability expected to face significant headwinds through FY27. While recent dips in Brent crude prices provided temporary relief, structural issues like under-recoveries and potential government policy shifts are set to compress margins.

The Impact of Q1FY27 Under-Recoveries

According to a recent research report by domestic brokerage Prabhudas Lilladher (PL), the first quarter of FY27 is expected to weigh heavily on the profitability of OMCs. The brokerage anticipates significant under-recoveries due to specific pricing constraints.

Specifically, the report expects under-recoveries of ₹7/litre for Motor Spirit (MS) and ₹10/litre for High-Speed Diesel (HSD). These figures are calculated after factoring in a ₹10/litre excise duty cut and capping product cracks at USD 10/bbl for MS and USD 15/bbl for HSD. This suggests that even with moderating crude prices, the gap between procurement costs and retail selling prices remains a major concern for the sector.

LPG: The Persistent Pain Point

Liquefied Petroleum Gas (LPG) continues to be a significant drain on OMC balance sheets. The brokerage estimates that LPG under-recoveries could reach approximately ₹500/cylinder in Q1FY27.

This follows a volatile trend observed in previous quarters; for instance, LPG under-recoveries in May 2026 were estimated in the range of ₹610-₹670/cylinder, compared to much lower levels of ~₹170/cylinder in April 2026. Adding to this pressure, Saudi CP prices for Q1FY27 are projected to surge by 47% quarter-on-quarter, driven by supply constraints stemming from disruptions in West Asia.

The Excise Duty Rollback Risk

A critical variable for OMC earnings is the potential rollback of excise duty cuts. The current ₹10/litre excise cut was implemented as a crisis management measure rather than a permanent fiscal policy. As crude oil prices moderate and retail prices are adjusted, there is a growing possibility that the government may phasedly withdraw this benefit.

目前，由于这些消费税减免，政府每年承受约 1.7 万亿卢比的收入损失。任何试图通过恢复税率来收回这部分收入的举措，都将对 OMCs 的利润构成重大压力。

原油价格波动与库存重建

虽然美伊停火有助于布伦特原油跌破每桶 80 美元的关口，但油价前景仍具有波动性。虽然霍尔木兹海峡局势恢复正常可能会进一步压低价格，但预计会出现一种反向力量：库存补充。

随着各国在近期冲突中使用储备后开始补充其战略石油储备 (SPRs) 和常规库存，预计增量需求将支撑价格。这种补库周期可能会防止原油成本持续下跌，从而使 OMCs 面临的利润挤压持续存在。

核心要点

  • 盈利压力： 预计汽油 (MS, ₹7/升) 和高速柴油 (HSD, ₹10/升) 的大幅亏损将影响 2027 财年第一季度的收益。
  • LPG 脆弱性： 在沙特 CP 价格上涨的背景下，LPG 仍是主要的亏损产品，预计每罐亏损达 ₹500。
  • 政策风险： 逐步恢复每升 ₹10 消费税减免的可能性，仍是影响 OMC 利润率的主要风险因素。