Oil Marketing Companies Face Profitability Pressure from Q1FY27 Under-Recoveries and Excise Duty Risks
Oil marketing companies (OMCs) in India are expected to face profitability pressures throughout FY27 due to significant under-recoveries in Q1FY27, particularly from LPG losses estimated at around Rs500 per cylinder. Despite a recent drop in Brent crude prices below USD80 per barrel following a US-Iran ceasefire, ongoing price volatility and inventory rebuilding are likely to keep margins tight. A key risk remains the potential phased rollback of the Rs10 per litre excise duty cut, initially introduced as a temporary relief, which has cost the government approximately Rs1700 billion annually.