3QFY26 earnings preview: OMCs set to report a strong quarter; upstream and gas to remain under pressure
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The December quarter of FY26 is turning to be a tale of three segments for India’s oil and gas sector. While oil marketing companies (OMCs) are set to report a strong quarter, upstream producers and gas utilities are likely to remain under pressure, reflecting divergent trends in crude prices, refining margins, and gas realizations.
A report by Kotak Institutional Equities states that 3QFY26 is expected to be decisively positive for OMCs, aided by a sharp 6% quarter-on-quarter decline in average crude oil prices, elevated product cracks, and the absence of any change in retail fuel prices. In addition, OMC earnings will receive a one-time boost from LPG compensation of around ₹50 billion, although inventory-related volatility is expected to persist. As a result, EBITDA for BPCL, HPCL and IOCL is projected to grow between 9–18% sequentially and 31–141% year-on-year.
Meanwhile, Reliance Industries’ consolidated EBITDA is expected to rise about 9.3% year-on-year, supported by strength in the oil-to-chemicals (O2C) and telecom businesses. O2C EBITDA is expected to rise 10% QoQ (15% YoY) from improved refining margins and a weaker rupee, although partly offset by weak petrochemical margins. Jio’s EBITDA growth is estimated to rise EBITDA to rise 15% YoY, supported by modest ARPU expansion, while retail growth is normalising after a strong festive-led previous quarter.
January 2026
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Upstream companies are likely to be the weakest link this quarter, the report stated. ONGC’s EBITDA is expected to decline around 10% YoY, hurt by lower oil and gas price realizations. Brent crude prices fell nearly 8% QoQ, while domestic gas prices softened in line with the oil-linked pricing formula. Oil India is expected to see a milder decline, but earnings momentum remains constrained.
Gas utilities also face a challenging environment. GAIL’s marketing and LPG segments are expected to weaken further, with its petrochemicals business continuing to post losses, with a flat YoY and a 11% decline QoQ. City gas distributors show mixed trends: Indraprastha Gas may report optically strong growth due to a low base and VAT benefits in Gujarat, while Mahanagar Gas is expected to post another weak quarter as higher gas costs offset limited pricing flexibility. Petronet LNG stands out in the gas space, with higher volumes and utilisation supporting EBITDA growth, with a likely rise of 8% YoY/QoQ. For Castrol, the report states an expectation of 4QCY25 EBITDA to rise 5.7% YoY, led by nearly 7% YoY volume growth.
“Overall, 3QFY26 underscores the sector’s dependence on crude price movements and regulatory dynamics, with downstream companies emerging as the clear near-term beneficiaries,” the report concluded.