Upstream oil and gas producers are expected to deliver robust earnings growth in the March quarter, driven by a sharp rise in crude oil prices. According to The Economic Times, Brent crude averaged around $81 per barrel in the March 2026 quarter, up nearly 28% sequentially, boosting net crude realisations for producers. Analysts expect operating profit before depreciation and amortisation (Ebitda) for upstream companies to rise 6-49% quarter-on-quarter while revenue may grow 17-22%. However, downstream oil marketing companies (OMCs) and city gas distribution firms are likely to report weaker results, with Ebitda projected to decline 8-50% sequentially for OMCs despite revenue growth of 17%-30%, reflecting significant margin pressure.
OMCs such as Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) are expected to register sequential earnings pressure due to lower product realisations as fuel prices remained stable despite a spike in crude prices. As reported by JM Financial Institutional Securities, the weighted average gross marketing margins on auto-fuel dropped sharply to about ₹1.7 per litre in the March quarter from ₹5.2 per litre in December quarter. This was well below the historical average of around ₹3.5 per litre, indicating severe margin compression for fuel retailers.
LPG under-recoveries for OMCs are likely to rise quarter-on-quarter to around ₹10,000 crore in the March quarter from about ₹1,900 crore in the prior quarter on account of a sharp rise in global LPG prices due to ongoing supply disruption due to war in West Asia. According to Kotak Institutional Equities, HPCL's Ebitda is expected to fall 51% quarter-on-quarter in the March quarter, while BPCL and IOC are likely to report declines of 28% and 22% respectively. The significant increase in LPG under-recoveries reflects the impact of global supply disruptions on domestic fuel pricing.
Gas utilities and city gas distribution (CGD) companies are expected to report a soft quarter hit by LNG supply disruptions through the Strait of Hormuz, higher spot LNG prices and rupee depreciation. As reported by The Economic Times, India's overall gas demand in the March quarter is estimated to have declined around 10% sequentially, as LNG imports were disrupted. This weighed on volumes and profitability across the gas value chain. GAIL's Ebitda is expected to drop 12-38% sequentially, led by weaker gas trading margins, lower transmission volume and losses in petrochemicals.
