India Oil Marketing Companies - OMCs continue to bleed despite small price hike

Research evidence excerpt

India Oil Marketing Companies - OMCs continue to bleed despite small price hike

Nomura | India Oil Marketing Companies 17 May 2026

Fig. 2: Diesel underrecovery post SAED impact

Current diesel % of diesel sold Realised diesel

Diesel windfall tax

Rating underrecovery purchased from underrecovery post

(INR/litre)

(INR/litre) third party refiners SAED impact

IOCL Buy 16.5 (27.6) 1% (27.5)

BPCL Buy 16.5 (27.6) 15% (25.1)

HPCL Neutral 16.5 (27.6) 40% (21.0)

Source: Bloomberg Finance L.P., Reuters Eikon, Nomura research

Fig. 3: Windfall tax trend

INR/litre

Announcement date Windfall tax on diesel Windfall tax on ATF Windfall tax on Petrol

26-Mar 21.5 29.5 -

11-Apr 55.5 42.0 -

30-Apr 23.0 33.0 -

15-May 16.5 16.0 3.0

Source: Nomura research

LPG losses are mounting too and now sizeable part of retail underrecoveries

The blockade in the Strait of Hormuz has severely impacted LPG supplies for India as

almost all of India’s imported LPG came from the Middle East before the war started on

28 Feb. In response, the Indian government asked Indian refiners to increase LPG output

and petchem plants to divert propane feedstocks to OMCs for distribution to households

which rely on LPG cylinders for cooking. This has resulted in a 50% increase in domestic

LPG production, but the import dependency is still significant at ~40% (vs 60% earlier).

India has diversified its LPG sourcing which includes regions such as the US, Norway,

Canada and Russia. However, the LPG cost for OMCs continue to be linked with the

Saudi Contract Price which has seen a sharp jump from USD520/ton to USD800/ton

currently. On top of this, the actual physical purchase is happening at a significant

premium to Saudi CP, along with higher logistics and insurance costs adding up to