The combined profit of Rs 77,821 crore for OMCs in FY2025-26 represents a 3 to 4 per cent net margin on a turnover of around Rs 20 lakh crore. This profit, though a 130 per cent increase from the previous fiscal year, is crucial for public investments as half of it returns to the Government of India as dividends.
Roughly half of the profit is channeled back to the government, funding critical infrastructure projects like roads, highways, railways, and public investments. The remaining portion is allocated to the capex pipeline, with a single refinery expansion program costing between Rs 50,000 to Rs 60,000 crore.
Despite concerns about the West Asia crisis, OMCs were well-prepared with 50 to 60 days of pre-conflict crude inventory. Any disruptions are expected to impact only the first quarter of FY 2026-27. The recent excise cuts on petrol and diesel by Rs 10 per liter have helped stabilize retail prices, which have seen a modest increase of 8 to 9 per cent since the crisis began.
The reported 130 per cent profit surge is contextualized against a low base in the previous year. In FY 2024-25, the profit was significantly lower due to absorbed under-recoveries on domestic LPG. The recovery in FY 2025-26 brings the profit figures back in line with previous years, indicating a return to normalcy rather than an unexpected windfall.
The comparison of profits to turnover reveals that the margins for OMCs, with a combined turnover of Rs 20 lakh crore, are within the typical range for commodity refiners of this scale. Indian Oil Corporation (IOC), with an annual turnover nearing Rs 10 lakh crore, maintains a profit margin of around 3 per cent, reflecting the industry norm.
