Shares of state-run oil marketing companies (OMC) such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) tanked up to 7% on Monday.
HPCL share price plunged as much as 7.58% to ₹318.70 apiece, BPCL stock price declined 5.20% to ₹242.30, while IOC shares cracked as much as 4.30% to ₹120.10 apiece on the BSE.
Here are key reasons why OMC stocks are falling:
1. Lower subsidy in Budget
OMC stocks extended losses after the Union Budget 2025 failed to announce compensation for under-recovery on the sale of cooking gas cylinders incurred by the state-run OMCs.
The budget documents indicated that the liquefied petroleum gas (LPG) subsidy amount was decreased to ₹12,100 crore for FY26 from ₹14,700 crore allocated for FY25.
In the first nine months of 2025, OMCs faced LPG under-recoveries totalling ₹30,000 crore. Indian Oil reported under-recoveries of ₹14,325 crore, followed by HPCL ( ₹7,600 crore) and BPCL ( ₹7,200 crore).
According to Jefferies, the budgeted LPG subsidy implies OMCs will bear 69% of fiscal year 2025 under-recoveries, which will cap their earnings upside.
“Today, Petroleum Minister Hardeep Singh Puri said that LPG under-recoveries for the OMCs, as of 9MFY25, stood at over ₹29,000 crore. This has worked as an instant negative sentiment against the OMC stocks in India,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.
2. Rupee weakness
The market expert also attributed the fall in the Indian rupee as another key reason for the weakness in OMC stocks.
The rupee plunged to a record low on Monday, surpassing the 87 per US dollar level. The US dollar index has been ascending continuously after the inauguration of Donald Trump as the 47th US President.
A falling rupee increases the cost of crude oil imports for OMCs like IOCL, BPCL, and HPCL, as oil is priced in USD. This squeezes their profit margins, especially if they can’t fully pass on the higher costs to consumers due to price regulations or competitive pressures.
“So, the market is expecting pressure on the balance sheet of the OMC companies due to the rising US dollar rates and LPG under-recoveries for the OMCs,” Gorakshkar said.
At 2:00 PM, HPCL share price was down 7.10% at ₹320.35 apiece, BPCL shares were down 3.36% at ₹247.00 apiece, while IOC stock was trading 3.94% lower at ₹120.55 apiece on the BSE.
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