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Q1FY27 saw the full impact of the Israel-US-Iran war on the performance of oil and gas companies. Brent averaged above $100/bbl, while the INR deteriorated to almost 95 versus the USD. Refining margins also spiked, with benchmarks averaging at $25/bbl. However, toward the end of the quarter, the conflict lost steam and commodity prices saw strong correction, with Brent near $70/bbl. There was volume curtailment in segments like natural gas and LPG, though broader petroleum demand was tactfully managed.

Middle-East conflict, higher petroleum prices to result in deep losses for OMCs

Brent averaged at ~$104/bbl in Q1, up 28% qoq, while benchmark GRMs strengthened to ~$25/bbl from ~$9/bbl qoq, supported by a spike in product cracks. However, the imposition of windfall levies on petrol, diesel, and ATF capped the earnings upside for standalone refiners. OMCs’ marketing margins on petrol and diesel (unadjusted for windfall levy) declined to negative ~Rs12/ltr and negative ~Rs32/ltr, respectively, in Q1FY27 (vs Rs8/ltr and -Re1/ltr in Q4FY26). ATF marketing margins also turned sharply negative, as prices for scheduled domestic flights remained frozen despite higher crude and jet fuel cracks, while LPG under-recoveries widened to ~Rs600/cyl. By end-Q1, though, oil prices sharply corrected and Brent recorded a weak close at ~$72/bbl, which should result in inventory losses for refiners. Amid steep marketing losses, OMCs are expected to report significant losses in Q1, with IOCL/BPCL/HPCL likely to post negative EBITDA of Rs253/161/159bn, respectively.

Higher realizations to drive upstream earnings; NRL impacted by weaker GRM

ONGC’s total crude output is estimated to decline 4% yoy, while OIL’s would grow 8%. However, gas output for ONGC/OIL is likely to fall 2-3%/3-4% yoy. Amid the sharp uptick in crude oil prices, oil realizations are expected to rise ~30% qoq in Q1FY27, while gas realization is also likely to improve. Despite lower production, we expect ONGC’s EBITDA to increase 122% qoq, driven by higher realizations and lower opex, while OIL’s EBITDA is likely to rise 116% qoq. We estimate ONGC’s/OIL’s RPAT at Rs160.4/23.2bn for Q1FY27E. NRL’s EBITDA is expected to decline 50% qoq to Rs7.2bn due to windfall levies and excise cuts (40% GRM decline qoq).

GAIL supported by transmission and LPG; PLNG’s EBITDA to be steady

GAIL’s Q1FY27E SA APAT is expected to increase 6% qoq to Rs13.0bn, driven by higher gas transmission volumes (up 5% qoq), better gas marketing margins, and stronger LPG earnings (higher production and stronger realizations), and partly offset by the softness in petchem (on higher gas costs, elevated opex, and lower utilization). PLNG’s Dahej utilization is likely to moderate to 63% (of expanded capacity) due to supply disruption, while Kochi utilization is expected to fall to 22%. PLNG’s EBITDA is likely to be flat qoq at Rs13.7bn, supported by lower opex.

CGDs better off qoq with margin expansion; volumes affected by I/CPNG cuts

MGL is expected to report moderate volume growth of 6% yoy, largely owing to lower I/CPNG volumes. However, unit EBITDA is likely to improve 33% qoq to Rs8.2/scm, driven by higher realizations and lower opex, resulting in a 36% qoq uptick in EBITDA to Rs3.5bn. IGL’s EBITDA/scm is likely to improve 16% qoq to Rs5.6 on lower unit opex. We estimate IGL’s EBITDA to increase 16% qoq to Rs4.9bn. Volume growth is likely to remain moderate at 6% yoy, amid the supply rationalization in Q1FY27.

Jio to support RIL’s sequential earnings growth; other businesses stable

We estimate RIL’s consolidated EBITDA to increase 2% qoq to Rs450bn (up 5% yoy). O2C EBITDA is expected to rise 2% qoq to Rs148bn. For Jio, we expect net subscriber addition of 9.5mn, with ARPU improving 1% qoq to Rs216.5, driving a 4% qoq uptick in EBITDA. Retail EBITDA is likely to be up 10% yoy at Rs70bn (up 1% qoq) on 17% yoy revenue growth (on a low base). Upstream EBITDA is likely to decline 5% qoq to Rs40bn due to a ~4% sequential decline in gas production and lower realization. We estimate consolidated APAT (after MI) to increase 4% qoq to Rs176bn, with increase in D/A.

Healthy volume growth for Gulf Oil Lube to offset margin moderation

We estimate core lube volumes to grow 12% yoy, while AdBlue volumes are expected to increase 8% yoy. EBITDA/ltr is likely to decline 4% qoq to Rs15.2. APAT is expected to increase 3% yoy to Rs995mn

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