India's oil marketers may see higher petrol-diesel margins in Q2FY27 despite LPG losses

According to JM Financial Institutional Securities, Indian oil marketing companies are set to experience a significant rebound in petrol and diesel margins in Q2FY27, climbing to Rs 11.4 per litre from Rs 2.4 in the prior quarter. After accounting for projected LPG losses of around Rs 11,000 crore, the net margin would settle near Rs 8.5 per litre, still slightly below the historic average of Rs 12.5. The outlook is buoyed by tight global product supplies, with refinery throughput down 4-5 million barrels per day and disruptions in the Middle East and Russia.

Strong diesel cracks, averaging $61.7 per barrel, also support the recovery. Nonetheless, the profitability outlook remains sensitive to Brent crude prices, requiring a landed price of about $95 per barrel for normal margins under current tax structures. ICRA notes that state-run firms like IOC, BPCL and HPCL face marketing losses on petrol and diesel, and under-recoveries on LPG, which could pressure cash flows and short-term borrowing.