OMC Earnings Outlook: Why Under-Recoveries and Excise Risks Loom for FY27

Oil Marketing Companies (OMCs) are bracing for a challenging fiscal period as projected under-recoveries for Q1FY27 threaten to squeeze profitability. Despite recent stabilization in global crude prices, a combination of high LPG costs and potential shifts in government tax policy creates a complex landscape for these energy giants.

The Q1FY27 Profitability Crunch: Under-Recoveries Explained

According to a recent research report by domestic brokerage Prabhudas Lilladher (PL), the upcoming first quarter of FY27 is expected to weigh heavily on the earnings of OMCs. The brokerage anticipates significant under-recoveries in fuel segments, estimated at ₹7/litre for Motor Spirit (MS) and ₹10/litre for High-Speed Diesel (HSD). These calculations factor in a ₹10/litre excise duty cut and a capping of cracks at USD 10/bbl for MS and USD 15/bbl for HSD.

The most significant pain point, however, remains Liquefied Petroleum Gas (LPG). Losses in the LPG segment are estimated to reach approximately ₹500 per cylinder in Q1FY27. This follows a volatile period in mid-2026, where OMCs reported LPG under-recoveries jumping from roughly ₹170/cylinder in April 2026 to between ₹610 and ₹670/cylinder in May 2026. This pressure is exacerbated by the expectation that Saudi CP prices for Q1FY27 will rise by 47% quarter-on-quarter, driven by supply constraints in West Asia.

The Excise Duty Rollback: A Persistent Regulatory Risk

A major overhang for the sector is the potential rollback of excise duty cuts. The ₹10/litre excise cut was originally introduced as a crisis management measure rather than a permanent fiscal policy. As crude oil prices moderate and retail prices see adjustments, there is a growing possibility that the government may begin withdrawing these benefits in a phased manner.

Currently, the government bears a substantial revenue impact of approximately ₹1,700 billion per year due to these excise cuts. For OMCs, any move by the government to reclaim this revenue through duty hikes or the removal of subsidies remains a key risk factor that could further destabilize earnings projections.

Crude Oil Volatility and Inventory Rebuilding

虽然最近的美伊停火有助于布伦特原油跌破 80 美元/桶大关，但该经纪公司警告不要掉以轻心。虽然伊朗石油出口的恢复和霍尔木兹海峡局势的正常化可能会在短期内压低价格，但预计会出现第二波需求。

随着各国开始补充其战略石油储备 (SPR) 和常规库存，全球需求可能会得到支撑。预计这一补充周期将创造增量需求，从而防止原油价格出现持续下跌趋势，并确保市场波动保持在高位，进而使国内炼油商的利润空间持续收窄。

核心要点

  • LPG 亏损： LPG 的显著回收不足（估计为 ₹500/cylinder）以及沙特 CP 价格的上涨，是对利润率的主要威胁。
  • 财政风险： 每升 ₹10 消费税减免可能面临的分阶段取消，仍是 OMC 盈利能力的关键压力点。
  • 原油动态： 虽然价格得到了缓解，但预计全球库存重建将在中期内推动波动并支撑原油价格。