OMC stocks: BPCL, HPCL, IOC shares in focus after commercial LPG cylinder price hike

Commercial LPG cylinder price hike: Shares of Indian Oil Corporation Ltd (IOC), Hindustan Petroleum Corporation Ltd (HPCL), and Bharat Petroleum Corporation (BPCL) Ltd are likely to be in focus after the price of 19 kg commercial LPG cylinders was raised by Rs 42 in Delhi, taking the retail price to Rs 3,113.50 per cylinder with effect from June 1, according to a report by India Today citing sources.

As per the report, the revised price for 19 kg commercial LPG cylinder in Kolkata has risen Rs 53.50 to Rs 3,255.50. In addition, the price of 5 kg Free Trade LPG (FTL) cylinders has been increased Rs 11, bringing the cost to Rs 821.5 in Delhi, it reported.

Stock analysts noted that LPG losses in the system remained significant, with FY26 cumulative LPG losses for India’s three OMCs standing at about Rs 19,400 crore. Given the spike in Asia spot prices -- Japan propane and butane prices up $200 per tonne in the last three months, quarterly losses could aggregate Rs 30,000 crore, in the absence of price increases, ICICI Securities had warned in a May 25 note. 

The brokerage further noted that LPG losses had increased, with loss per cylinder or rising to Rs 650 in May against Rs 170 per cylinder in April and Rs 100-120 per cylinder in Q4, which implies that average losses increased to Rs 5,040 crore in Q4 and are estimated to rise to Rs 22,000 crore in Q1FY27. 

"Therefore, the price increases, while material from the customer point of view, are necessitated to protect the net worth of the OMCs; especially since there is limited clarity on the resolution of the US-Iran conflict as of now," the brokerage noted.

Meanwhile, HDFC Institutional Equities said OMCs were still making losses on the sale of auto fuels despite reduction in Special Additional Excise Duty (SAED) by the government and increase in retail selling price by OMCs. It felt the government may compensate OMCs either by directly selling domestically-produced crude oil at a discount to benchmark prices or by imposing special duties on upstream companies.