Shares of oil marketing companies (OMCs) such as Hindustan Petroleum Corp., Bharat Petroleum Corp., and Indian Oil Corp. surged in trade, lifted by the government's decision to raise the price of household LPG and the special excise duty on petrol and diesel.
Oil companies are expected to recover around Rs 9,000 crore in FY26 through the Rs 50 hike in domestic LPG prices which will offset the ongoing losses, according to sources.
The Oil Ministry is also planning to seek Cabinet approval for a Rs 32,000 crore compensation package to support oil marketing companies (OMCs) amid these losses.
Officials said OMCs are likely to see improved margins as global crude oil prices soften to the $60–$65 per barrel range, compared to current inventories averaging $75. These improved margins would allow OMCs to absorb the Rs 2 hike in excise duty. If crude remains stable around current levels, there may even be a retail fuel price cut.
At 11.15 am, BPCL shares soared 2.8 percent to quote Rs 281.25 on the NSE, while HPCL's stock price jumped 4 percent to Rs 363. Shares of state-run IOCL gained 1.7 percent to Rs 130.3.
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Global broking firm HSBC said the oil prices and excise duty support high margins, however the risk perception is raised. The brokerage decided to maintain its buy call on HPCL, BPCL, and IOCL, however it cut its price targets on the OMCs.
| HSBC trims target prices on OMCs | ||
| Company | Old Target Price | New Target Price |
| HPCL | Rs 480 | Rs 450 |
| BPCL | Rs 440 | Rs 400 |
| IOCL | Rs 170 | Rs 150 |
Citi Research said that the government is leveraging the recent drop in crude oil prices to offset LPG-related losses faced by oil marketing companies (OMCs). It has increased excise duty on petrol and diesel by Rs 2 per litre while keeping retail fuel prices unchanged, which cuts OMCs' previously super-normal margins.
The excise hike is expected to boost government revenue by Rs 33,000 crore annually, helping cover estimated LPG losses of Rs 41,300 crore. Additionally, the Rs 50 per cylinder hike in domestic LPG prices is likely to reduce LPG losses by 23 percent, according to Citi.
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