Macquarie Slashes India Oil & Gas FY27 Earnings Forecasts on Macro Headwinds

Macquarie has substantially lowered its fiscal year 2027 earnings forecasts for India's leading oil and gas companies, citing macroeconomic challenges and projecting significant near-term losses for the country's oil marketing companies (OMCs).

In a note released Wednesday, the investment firm made deep cuts to its projections for the fiscal year ending in 2027, while making only modest adjustments for fiscal year 2028 and maintaining its overall positive medium-term outlook.

Widespread Downgrades

The most significant revisions were applied to the OMCs, with Macquarie cutting its FY27 earnings estimates for Bharat Petroleum by 36%, Indian Oil Corporation by 30%, and Hindustan Petroleum by 26%. The firm also reduced its forecasts for other key players in the sector:

• Midstream: GAIL India's estimate was cut by 10%, and Petronet LNG's by 19%.
• City Gas Distributors: Mahanagar Gas saw a 22% reduction, while Indraprastha Gas was lowered by 13%.

Following these revisions, Macquarie trimmed its target prices for the companies but kept its two-year forward multiples unchanged.

Near-Term Pain for Oil Marketers

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Macquarie anticipates a challenging first quarter of fiscal year 2027 for the OMCs, projecting substantial losses. The firm forecasts negative EBITDA of ₹218 billion for Indian Oil Corporation, ₹161 billion for Bharat Petroleum, and ₹146 billion for Hindustan Petroleum.

The note highlighted the sensitivity of these companies to global energy prices, stating that every $1 per barrel change in crude oil input costs impacts their EBITDA by 5% to 6%, assuming other factors remain constant.

Medium-Term Outlook

Despite the near-term headwinds, Macquarie maintained its positive medium-term view on the sector. This outlook is anchored by a bearish forecast for crude oil, with the firm expecting Brent prices to fall to $68 per barrel in the second half of 2026 and further to $64 per barrel in 2027.

Macquarie expects this decline in crude prices to eventually lead to a normalization of earnings for OMCs and a recovery in gas demand. In the nearer term, the firm noted that above-normal refining margins are expected to support profitability, assuming no changes to excise duties or retail fuel prices.