Operating profit of oil marketers set to jump over 50% to in FY26: Crisil Ratings
- IBEF
- November 24, 2025
Oil marketing companies (OMCs) are positioned for a substantial profitability rebound in FY26, with operating profits projected to surge over 50% to Rs. 1,605-1,783 (US$ 18-20) per barrel. This improvement stems from enhanced marketing margins, stable retail fuel prices, and favourable crude oil dynamics. Crisil Ratings reports that while gross refining margins (GRMs) are expected to moderate to Rs. 356- 535 (US$ 4-6) per barrel due to sluggish global fossil fuel demand amid the energy transition, marketing margins will more than compensate by jumping to Rs. 1,248 (US$ 14) per barrel. Crude oil prices are forecast to soften to Rs. 5,795-5,974 (US$ 65-67) per barrel. In FY25, OMCs achieved operating profits of Rs. 1,069 (US$ 12) per barrel, with GRMs and marketing margins contributing Rs. 535 (US$ 6) per barrel each, aligning with the decadal industry average. The projected Rs. 1,605-1,783 (US$ 18-20) per barrel represents a significant uplift from FY23's Rs. 11.6 (US$ 0.13) per barrel when crude averaged Rs. 8,292 (US$ 93) and surpasses FY24's peak of Rs. 1,783.30 (US$ 20) per barrel when crude averaged Rs. 7,400 (US$ 83).
The strengthened profitability will drive cash accruals to Rs. 75,000-80,000 crore (US$ 8.41-8.97 billion), a marked increase from Rs. 55,000 crore (US$ 6.17 billion) in FY25. These robust cash flows will finance the sector's planned capital expenditure of Rs. 90,000 crore (US$ 10.09 billion), primarily directed towards brownfield expansion and domestic demand-driven projects. Consequently, leverage metrics are set to improve, with the debt-to-EBITDA ratio expected to ease to 2.2x from 3.6x in the previous year. While capital expenditure momentum continues, healthier earnings will reduce reliance on external debt. Credit profiles remain underpinned by the sector's strategic national importance and government ownership. However, analysts caution that significant supply cuts or geopolitical escalations could disrupt crude price assumptions and alter the positive outlook, though the current combination of stable retail pricing, softer crude, and sustained demand provides OMCs with a supportive operating environment.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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