HPCL, BPCL, IOCL: Q1FY27 EBITDA loss may hit ₹47,700 cr

Crude surge sharpens focus on marketing losses

India’s state-run oil marketing companies (OMCs) are expected to report a weak June quarter as crude prices rose while retail fuel prices did not fully reflect higher costs. Analysts tracking Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) say the pressure is most visible in marketing margins on petrol, diesel and LPG. The key issue flagged across brokerage notes is under-recoveries, or losses incurred when fuels are sold below cost. While refining profitability has been better in parts of the quarter, it is not expected to fully offset marketing losses.

Nomura’s Q1FY27F estimate points to EBITDA losses across OMCs

Japanese brokerage Nomura expects EBITDA losses for all three companies in Q1FY27F. It estimates HPCL to report an EBITDA loss of ₹13,900 crore, BPCL ₹15,800 crore, and IOCL ₹17,300 crore. Nomura attributed the losses to significant under-recoveries in the retail sale of petrol, diesel and LPG, as companies were unable to pass on higher crude oil prices to consumers. The brokerage also noted that stronger gross refining margins (GRMs) likely provided partial support during the quarter.

JM Financial pegs combined Q1FY27 EBITDA loss at about ₹47,700 crore

Domestic brokerage JM Financial expects an even deeper combined hit in Q1FY27. It estimates a total EBITDA loss of around ₹47,700 crore for HPCL, BPCL and IOCL together. The JM Financial split implies losses of ₹17,300 crore for HPCL, ₹17,200 crore for IOCL, and ₹13,200 crore for BPCL. Across both Nomura and JM Financial estimates, the common driver is a sharp deterioration in retail marketing economics during the quarter.

Blended marketing margins worsened from Q4FY26 to Q1FY27F

Nomura expects blended marketing margins to have deteriorated to a loss of ₹20-21 per litre in Q1FY27F, from a loss of around ₹5 per litre in Q4FY26. It cited higher refinery transfer prices and rupee depreciation as key reasons for the swing. Nomura analyst Bineet Banka’s calculations indicate OMCs were losing around ₹25 per litre on petrol and diesel on a blended basis. Including LPG, Nomura estimates the daily loss run rate at ₹1,380 crore.

LPG under-recoveries remain a major drag

Alongside auto fuels, LPG is described as a persistent pain point in multiple brokerage notes. The dataset includes estimates of around ₹340 per cylinder LPG under-recovery, while another section states losses of about ₹500 per domestic LPG cylinder. JP Morgan also pegged LPG losses at around ₹500 per cylinder for Q1FY27. These figures highlight that even if auto-fuel economics improve, LPG can continue to pull down overall marketing profitability.

Price hike of ₹3 per litre offers relief, but not a breakeven fix

Even after the government raised petrol and diesel prices by ₹3 per litre, analysts said under-recoveries continued. The same set of estimates suggests OMCs would require another ₹25 per litre increase merely to break even on marketing margins. Elara estimated that the ₹3 per litre increase could reduce annualised integrated losses on petrol and diesel by around ₹34,500 crore. But the gap indicated by the breakeven math shows why Q1FY27 profitability is expected to remain weak.

Inventory and refining dynamics: support, but not enough in Q1

Nomura said stronger GRMs likely offset part of the marketing losses. JP Morgan added that earnings in April to June are likely to be hurt by large inventory losses, but it expects the profitability trend to improve from the second quarter. JP Morgan also said composite petrol and diesel margins are now above levels seen before the recent Middle East conflict, helped by lower crude and reduced central excise duties. Even so, it flagged that standalone fuel marketing margins remain below historical averages and LPG losses remain elevated.

What industry and policy commentary says about accumulated losses

Oil Minister Hardeep Singh Puri said state-owned OMCs have together incurred losses of ₹74,781 crore on the sale of petrol, diesel and subsidised LPG. These losses have accumulated because petrol and diesel have been sold below cost for more than four months, as per the dataset. Industry estimates cited in the same material indicate that if crude prices remain around $15 a barrel, OMCs could begin recovering accumulated losses over the next six to 12 months. Experts also caution that reducing retail prices before profitability returns would effectively mean an additional indirect subsidy.

Key estimates and indicators in one view

Market impact: what investors are tracking now

For investors, the immediate focus is the magnitude of Q1FY27 losses and the path to margin normalisation. The data points suggest the operating picture hinges on whether crude prices stabilise and whether retail prices are adjusted enough to close the per-litre gap. JP Morgan’s view that profitability should be better from the second quarter depends on crude staying below $10 per barrel and refining margins staying elevated. At the same time, higher debt levels and uncertainty over fuel taxes were flagged as constraints on the sector’s longer-term earnings outlook.

Conclusion: Q1 pain, Q2 hinges on crude and pricing

For Q1FY27, analyst estimates converge on large EBITDA losses for HPCL, BPCL and IOCL, driven mainly by under-recoveries in petrol, diesel and LPG. Stronger refining margins and the ₹3 per litre fuel price hike may soften the blow, but the break-even math in broker estimates indicates marketing losses remain meaningful. The next milestone for the sector will be Q2 performance, where brokerages expect improvement if crude remains contained and inventory effects do not overwhelm refining support. Investors are also likely to watch any further price revisions and the trajectory of LPG under-recoveries, given their direct impact on consolidated marketing profitability.