Shares of state-run oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited are expected to remain in focus during Friday’s trading session after the companies announced a Rs 3 per liter increase in petrol and diesel prices. The revision comes as the three public sector refiners attempt to offset a portion of the heavy losses incurred due to persistently elevated global crude oil prices. The latest fuel price increase marks the first upward revision by the oil marketing companies since April 2022 and reflects growing pressure on their profitability.

The increase in retail fuel prices is expected to provide partial financial relief to the companies, which are estimated to face combined losses of nearly Rs 1 lakh crore to Rs 1.2 lakh crore during the first quarter of the financial year ending March 2027. Analysts believe the decision could improve investor sentiment toward the three oil marketers, particularly as concerns over shrinking marketing margins have intensified in recent months. However, industry estimates indicate that the current price revision may still fall significantly short of restoring profitability or achieving complete cost recovery.

According to market calculations, the Rs 3 per liter hike would help the companies recover nearly Rs 125 crore per day. Despite this improvement, the figure remains substantially lower than the estimated daily losses of around Rs 1,100 crore to Rs 1,300 crore currently being absorbed by the firms. Rising crude oil prices and government pressure to maintain retail affordability have continued to weigh heavily on the financial performance of the public sector oil retailers. The companies have therefore been operating with deeply compressed marketing margins for an extended period.

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Brokerage estimates suggest the oil marketing companies would require a much steeper increase in fuel prices to fully recover losses and return to break-even levels. Analysts estimate petrol prices would need to rise by an additional Rs 28 per liter to bridge the current cost gap, representing a shortfall of nearly 29.5 percent. Similarly, diesel prices would need another Rs 32 per liter increase to achieve full cost recovery, indicating a gap of approximately 36.5 percent. These estimates underline the continued financial stress facing the sector despite the latest pricing revision.

Market experts also pointed to the significant impact fuel margin improvements can have on company earnings before interest, taxes, depreciation, and amortization, commonly referred to as EBITDA. Brokerage data cited by NDTV Profit showed that every 50-paise increase in fuel marketing margins could potentially raise EBITDA by about 7 percent for IOCL, 8 percent for BPCL, and 11 percent for HPCL. Based on those calculations, the newly announced Rs 3 per liter increase could translate into a meaningful boost to operational earnings across all three companies.

The fuel price hike comes at a time when investors are closely monitoring the government’s balancing act between controlling inflation and ensuring the financial health of public sector oil firms. While the move is expected to ease some of the pressure on balance sheets, analysts believe additional pricing reforms or support measures may still be necessary if crude oil prices remain elevated globally. Market participants will now watch how the revised pricing impacts company earnings, stock performance, and broader energy sector sentiment in the coming weeks.

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