IGI Logo

Quick Pointers

* Upstream earnings to shine due to high crude prices

* OMC’s/CGD’s earnings expected to remain under pressure

Q4FY26 performance is expected to remain subdued due to West Asia disruptions. While aggregate sales are likely to grow ~7.0% QoQ, EBITDA and PAT are expected to decline by ~10.5% and ~17.6% QoQ, respectively. Upstream companies are the biggest beneficiary of higher crude prices with +19.7% QoQ EBITDA growth. Standalone refiners are expected to benefit from stronger crack spreads and hence MRPL EBITDA is expected to rise by ~13.6% QoQ. In contrast, OMCs, CGDs, and gas utilities are expected to remain under pressure. OMC EBITDA/PAT are expected to decline ~33.4%/~43.1% QoQ, while CGD and gas utility EBITDA are expected to fall by ~13.0%/~19.0% QoQ. RIL’s standalone EBITDA is expected to decline ~5.0% QoQ due to higher freight costs, while RJIL and Retail are expected to grow ~3.3% & ~1.5% QoQ, respectively.

Crude oil prices increased on war risk premium:

West Asia disruptions pushed crude prices higher in Q4FY26, crossing the 3-digit psychological mark of USD100/bbl in March’26 and averaging USD77.9/bbl in Q4FY26. As a result, upstream segment remains a key beneficiary driven by higher crude realizations. Possibility of windfall taxes on upstream players remains a concern as crude oil prices remain elevated.

Refining cracks surge sharply amid supply disruptions

 Refining cracks surged sharply in Q4FY26, driven by a tightening product market amid escalating geopolitical disruptions. Singapore GRMs improved to USD7.8/bbl in Q4FY26 from USD4.9/bbl in Q3FY26. Petrol/diesel/ATF cracks grew to USD16.8/44.4/35.8/bbl, vs USD13.7/23.2/22.8/bbl in Q3FY26, led by a sharp spike in Mar’26. In a surprising move, Fuel oil cracks turned positive to USD11.0/bbl in March’26, with Q4FY26 average at USD1.0/bbl vs USD-10.0/bbl in Q3FY26. Naphtha spreads improved to USD5.9/bbl (vs USD2.0/bbl QoQ), with March’26 at USD24.8/bbl.

Rupee depreciation exacerbates further 

USD/INR depreciated further in Q4FY26, averaging 91.5/USD versus 89.1/USD in Q3FY26, with the currency briefly breaching the psychological 95/USD level. he weakness was primarily driven by persistent FII outflows, which accelerated to record monthly levels in March, alongside a sharp increase in crude oil prices following the escalation of geopolitical tensions in the Middle East. RBI intervention helped limit sharper volatility; however, the rupee remained under pressure through the quarter.

Top Picks  We upgrade IGL and HPCL to buy from Accumulate. IGL is expected to offer better CNG volume growth prospect, while HPCL’s improving operational efficiency and completion of major projects remains a positive. Recent price correction also offers better entry opportunity. We maintain the rating for the remaining covered companies.

Please refer disclaimer at Report
SEBI Registration number is INH000000933