New Delhi, Sep 16: Strategic government measures have enabled Indian Oil Marketing Companies (OMCs) to perform strongly despite a volatile global oil environment, a report by HSBC Global Investment Research said on Tuesday.
Over the past six months, OMCs faced challenges including fluctuating refining margins, pressure from the US to reduce imports of Russian oil, and depreciation of the Indian rupee against the US dollar. Yet, the government’s timely support—including backing commercial decisions and promising reimbursement for LPG under-recoveries incurred in FY24—helped OMCs navigate these hurdles.
This support contributed to OMC stocks rising 14–23% in the past six months, outperforming the NIFTY50 index, which gained 12%. Combined refining and marketing (R&M) margins remained resilient at $22–25 per barrel, significantly higher than street and HSBC full-year estimates.
HSBC noted that while refining margins experienced interim fluctuations and currency depreciation affected marketing margins, the overall margin stability provided a safety buffer for these historically volatile companies.
Auto fuel demand also maintained strong growth in August 2025, with gasoline up 5.5% YoY and diesel rising 1.2% YoY, despite aviation turbine fuel (ATF) demand remaining slightly negative for the second consecutive month. Expansion of OMC outlets continued, growing 8% YoY, with electric vehicle (EV) outlets now comprising 30% of the total network.
The report highlighted that large capital expenditure plans undertaken by OMCs, coupled with a potential surplus in global oil from Q4 CY25, provide further cushioning for earnings. The government is unlikely to intervene aggressively in margins, ensuring continued financial stability for the sector.