OMCs Report Record Profits. Then Why Are Petrol Prices Rising? | IOC, BPCL, HPCL

本站添加: 2026-05-28

[00:00:00]Let's also talk about the oil marketing companies at clash. All the three OMC's uh BPCL, HPCL and IOCL have all reported their numbers already. Why are we bringing that up? Because across social media we are now looking at a lot of uh information that's going around asking that while the oil marketing companies continued to post profits in Q4 of FI26 why is it that we were talked about and told that these companies are incurring heavy losses on under recoveries on petrol and diesel and therefore these two pictures do not match. Today we will try and break this down for you as to what the true picture is. Remember there are also questions being raised that in case the companies are in huge profits then why is the need for uh you know the fuel prices at petrol and diesel pumps need to be raised at this you know sharp level. We've already seen four consecutive times when petrol and diesel prices have been raised and uh you know people are questioning that on the one hand we were told that oil marketing companies are incurring losses but on the other when we look at the Q4 results we actually find that these companies are posting profit. So where is the true picture? That is something that we will try and break down for you as well. So first up let's try and understand yes the oil marketing companies IOC HPCL and BPCL have posted profit after tax in Q4 FFI 26 we've seen IOC and HPCL posting handsome profits BPCL profits largely remained flat remember international oil prices that were around $70 $72 a barrel before the West Asia war broke out on February 28 that has surged about 66% in the last couple of months and has reached $120 a barrel on March 9.

[00:02:00]However, they softened a bit in May and remained elevated in the entire month of April. Currently, the oil prices are hovering at around $105 a barrel. That is around 14% below the peak of $120 a barrel that we see. Cumulatively these three oil marketing companies have p seen a 130% jump in their combined net profit in FI26 to around 77,280 cr rupes. This is compared to 33,600 cr rupes of combined net profit that they had posted in FI25 according to their standalone financial results that were declared this week. Now the performance was largely on account of stable oil prices for much part of the year till the USIsrael Iran war uh broke out in February that royd the market with the raw material prices relatively low. The finished product prices stable.

[00:03:01]These companies enjoyed high refining and marketing margins. That was one reason which aided the results for the company. HPCL that reported its numbers in Q4 and FI26 results on May 13th, we saw a 46% jump in its net profit number in Q4 that came in at 4,91 cr rupees. Remember in the full financial year FI26 HPCL's net profit was 17,75 crores 133% jump as compared to 7,365 crores that the company had reported in FI25. The company has also declared a dividend of 19 rupees per share and what we've also seen an interim dividend of 5 rupees per share has been declared. Now let's come to IOC. IOC was the second to declare financial results on May 18th.

[00:03:54]This is the country's biggest refiner.

[00:03:56]It posted a profit of 11,377 crores in Q4 and that registered a jump of 56%. For FI26, the company registered a profit of 36,82 crores. Again, this was a jump of nearly 184% as well. Now, what did the company say? The improvement in the net profit is mainly on higher refining and marketing margins is what the company has said. BPCL that posted its companies last week we've seen it has seen the marginal decline in profit after tax by.7% here to 3,191 cr rupees in Q4. Remember for the full fiscal year FI26 the company however has posted a sharp jump of 75% jump in the net profit number which has come in at 23,33 cr rupes remember the government did not raise petrol and diesel prices for more than 2 months after the war had begun after the company's monthly revenue losses surged to about 30,000 cr rupees the first hike in petrol and diesel of 3 rupees a liter came in uh just last week and we saw over the last four times that this has cumulatively gone up by 7 1/2 rupees for petrol and diesel almost. Now what did the companies um and executives and government officials said? They said that these companies are unlikely to repeat the same financial performance in FY27 if the war prolongs and if the energy prices remain elevated even after the petrol and diesel prices have been raised by around 7 rupees. Yes, their per day um losses of about 1,000 crores, cumulative losses that they are incurring on these fuel prices because of under recoveries, it has come down to 600 crores. But even after the 72 rupees surge that the fuel prices have gone up by uh the government has come and talked about how these three companies are still incurring 600 cr rupes of a loss per day. What did the company executive say? They said that the losses have reduced because of two reasons. One, international oil prices have softened a bit in May compared to March and April and the companies have also reduced the losses on petrol and diesel by raising some of the rates that have actually gone up. Now, India's average crude oil purchase basket. That's called as the India basket that also has come in at $70.99 a barrel. This has spiked after the war in West Asia. It almost went up to $140 $150 a barrel as well. That was another reason why the pain point was being seen for the company. Now yes, we do understand the crude oil prices have softened a bit from their all-time high levels. Rupee is also you know cooling off from its peak but it has continued to remain um you know impacted through because of the depreciation against the dollar as well. Now we will try and understand from tapan what really is happening here. Tapan I want you to explain to our viewers the clear picture. Yes, there is a profit when we look at the bottom line of these companies financial year 2026 that I highlighted and even in Q4. Now the question comes in are these real profits? Will they be sustainable? Is there something else that we need to know? Why the companies are being still seen as having losses of upwards of 600 crores or 1,000 cr rupees per day on these under recoveries?

[00:07:33]Yes, you you beautifully explained the why they have given a profit and but I think this is not going to replica next quarter next quarter no because whole month of know you can say the April May June know will the prices were at the elevated level so there we can see a deep on the profitability and next one or two quarters at least I can see a sustainable deep in the profitability the reason is simple that as the price elevated again the whatever prices are has gone up now almost 7 and a half rupees is not enough to cover it. Uh almost 30,000 C losses normally the OMC know are suffering now because of this price hike it is come down substantially but still we don't know till what time these prices will be on a higher side.

[00:08:15]So as a investor I'll talk from the investor perspective know you have to see that this is a period of 6 month or 9 month where these stocks will be know you can say in a range bound and may not go up but one thing is so clear that after maybe 6 month 9 months when the conflict is over and the resolution is that the prices when it goes down below $80 then the profitability again will start shooting up so I don't expect any uh rise in profitability for next two quarters but this will be a time if it goes all these stocks or IOC or BPCL HPCL no I think once it goes below 10 to 15% from here I think that is a time to one can accumulate provided you have a period of 1 one and a half year at least at least 1 to two years so that now if the oil prices goes down again the profit will come see it's totally depend on the oil prices again government policy all these there but I think will ensure that this company does not make much of the losses remember one and a half year they have made a very good profit earlier okay So I think one can think about this but they have to wait for one or two quarter more let it stabilize and then you can think about another one year two then only getting >> all right so I hope viewers you are able to understand that all these oil marketing companies do not just make profits by selling petrol and diesel only. There is a mix of a lot of uh things that they do which lead to their profitability like refining margins, like marketing margins, like inventory gains or losses, like the pet chem exports that they also do that also contributes to their bottom line and the timing mismatch between so the crude purchase at what time did they do and the fuel sale what happened uh you know when they sold this entire refined crude uh to the petrol pumps as well. So this entire process is complicated and we need to understand all these aspects and just do not equate uh you know uh that these underreoveries that are being seen currently because of the crude oil and the strong FI26 and the Q4 numbers both things can be true at the same time.

[00:10:19]Yes, you see the profits right now but the current situation is different because of the sharp surge in crude oil prices and the sharp uptick in the under recoveries due to rising crude oil prices. So why the oil marketing uh companies reported big profits was largely because the prices were stable for a large part of FI26 on crude oil around $70 a barrel. They helped the oil marketing companies to earn very high refining and marketing margins. They bought the crude cheap. They refined it into petrol and diesel. They sold fuel at a relatively uh at elevated retail prices. They pocketed strong margins as well. That's why they had earned FY26 profits in a strong manner both for OC, HPCL and BPCL like we highlighted for you. But because the uh situation has changed sharply because of the West Asia conflict. Now the crude oil prices are above $10510 a barrel. But the retail uh prices have not immediately increased right when the price was um you know seen on the upward direction. Two months uh these companies had to bear all the losses because of of course some of the reasons that all of us keep talking about whether the government did not allow the price rise to happen because of elections. Many experts will say that but you know at the time when the government kept on postponing it, it was the oil marketing companies that kept on bearing the losses as well. They bought expensive crude oil but they were selling domestic fuel at a much lower price. This gap is called the underreovery. Suppose the actual cost becomes 100 rupees per liter but you are still getting uh you know 94 rupees per liter. It is the 6 rupee gap that the companies had to face. That is something that we are talking about. So the officials have estimated losses of 30,000 cr rupees per month for these companies. So the first two months when the prices were not raised at the fuel price at the fuel pumps these companies almost let you know bored the losses of almost 60,000 cr rupes together in the last 2 months. Now they are recovering some of those losses. But will that gap be fully you know filled up? The kind of price rise we have seen already. Will there be need for further price rise?

[00:12:34]Most of the experts say yes there will be need for further price rise if we need to see covered up losses for oil marketing companies as well. So now the important thing is that Q4 FI26 is more backwardlooking. What we are now seeing is a forward-looking measure that you will see in Q1 and Q2 as well. Uh if you could also explain tapen will we see a negative impact of the under recoveries in Q1 and Q2 for oil marketing companies in case the situation remains tense in case they are not able to pass on the full impact of the under recoveries to people. Of course it it will show uh because you know still resolution is not there and there are chances quarter one there are much more chances in quarter two also because you know they have inventory and whatever they have bought at at a higher level will be going at these prices no higher prices and again the petrol pump prices has gone up just now so yes quarter one there will be higher chances that they will have under recovery again uh for the second quarter also there are chances so at least I'm uh I'm I think the next two quarter will be tough for these OMC's.

[00:13:45]>> All right. Okay. Well, we'll thank you then Tapen for being with us on this special edition uh and for sharing all your thoughts there.

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