State-owned oil marketing companies have officially reported significant losses for Q1FY27, with Hindustan Petroleum Corporation Ltd (HPCL) posting a consolidated loss of ₹12,265 crore compared to a profit of ₹4,111 crore in the same quarter last year, as reported by The Times of India. Bharat Petroleum Corporation Ltd (BPCL) recorded a consolidated loss of ₹1,873 crore against a profit of ₹6,839 crore in the corresponding quarter of the previous fiscal. Indian Oil Corporation is yet to announce its financial results, with the company expected to report losses of ₹18,570 crore according to earlier estimates from PL Capital. The losses are attributed to higher crude prices, a weaker rupee, elevated insurance costs and delayed fuel price hikes, with the US-Iran war creating additional pressure on OMCs. HPCL's Q1FY27 net profit came in line with street estimates of ₹11,456 crore, while BPCL outperformed expectations with a net loss of ₹3,960 crore, significantly lower than Nomura's projection of ₹12,632 crore.
The financial impact of under-recovery has intensified significantly, with HPCL recording an under-recovery of ₹3,607 crore on LPG sales and BPCL booking an under-recovery of ₹3,485 crore on LPG sales during the quarter, according to The Times of India. Despite raising fuel prices four times across the country in May, OMCs continue to face substantial under-recoveries. OMCs incurred losses of ₹12 per litre on petrol sales and ₹32 per litre on diesel in Q1FY27, compared with a profit of ₹8 per litre on petrol and a loss of ₹1 per litre on diesel in Q4FY26. The companies raised petrol prices by ₹7.38 per litre and diesel by ₹7.52 per litre in May 2026, though this was partially offset by a ₹10 per litre excise duty cut and government caps on domestic refinery transfer prices. Oil companies' under-recovery on liquefied petroleum gas (LPG) is expected to average at ₹430 per cylinder during the quarter.
Despite posting losses, both companies demonstrated revenue growth during the quarter. HPCL's revenue from operations rose 20.8% to ₹1.45 lakh crore from ₹1.20 lakh crore in the year-ago period, while BPCL's revenue increased 23% to ₹1.59 lakh crore from ₹1.29 lakh crore in the corresponding quarter of the previous fiscal, as reported by Upstox. However, the profitability of both companies was severely impacted as they kept petrol and diesel prices unchanged despite global crude prices surging more than 70% at the peak of the US-Iran conflict. The subsequent price increases of nearly ₹7.5 per litre for petrol and diesel, along with an increase of ₹89 in the price of a 14.2-kg domestic LPG cylinder in the second half of May, proved insufficient to offset the sharply higher input costs. HPCL posted an operating loss (EBITDA) of ₹14,860 crore due to high crude oil prices, while BPCL's core operating margins dropped to -4.1% compared to 5.7% in the previous year, with input costs rising to ₹90,588 crore from ₹53,686 crore.
Crude oil prices created significant volatility during the quarter, with prices averaging $104 per barrel in Q1FY27 but sharply correcting to around $72 per barrel in June amid expectations of a ceasefire between the US and Iran, as reported by Business Standard. Despite high gross refining margins (GRMs), the imposition of Special Additional Excise Duty (SAED) or windfall tax by the government on export of petrol, diesel and aviation turbine fuel (ATF) limited refiners' ability to fully benefit from stronger international refining cracks. Benchmark GRMs strengthened to $25 per barrel in Q1FY27 from $9 per barrel Q4FY26, supported by a spike in product cracks, according to Emkay Global. BPCL significantly outperformed HPCL in refining margins, posting a GRM of $41.1 per barrel for Q1FY27, boosted by marketing or inventory gains of ₹3,134 crore and a forex gain of ₹350 crore during the quarter. HPCL posted a gross refining margin of $23.8 per barrel, nearly half that of BPCL, highlighting the divergent operational performance between the two companies.
Rupee depreciation during the quarter further impacted companies' performance, with the Indian currency weakening to ₹94.7 per dollar in Q1FY27 as against ₹91.5 per dollar in Q4FY26, according to Business Standard. The government has implemented export duties to discourage fuel exports and prioritise domestic availability amid the West Asia crisis. The export duty on petrol currently stands at ₹2.5 per litre, while diesel and ATF exports attract levies of ₹15.5 per litre and ₹14.5 per litre, respectively. These measures were implemented to ensure adequate domestic fuel supply during the ongoing West Asia crisis, with the government levying export duties to discourage exports and prioritise domestic fuel availability.
