India Energy: A Refining-Cycle Bounce Off A Low Base, Not A Re-Rating

A head-analyst read on the latest earnings, broker positioning, regulator and policy signals, and consulting research on Indian oil, gas and downstream energy — anchored to Aurific's same-store growth panel.

Analyst memo

The sector is moving from a refining-margin reset (FY2025) to a cracks-driven recovery (FY2026) — but the recovery is borrowed from geopolitics, not earned from structure. The edge is shifting toward integrated O2C and downstream players that monetise the crude–crack spread, away from policy-squeezed city-gas and a normalising coal panel.

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Executive Summary

The constructive side is visible in the panel. FY2025 was a genuine reset — the same-store Energy aggregate (n=54) showed revenue up only +2%, EBITDA -17% and PAT -25%, with the EBITDA margin contracting 2.5pp to 11.24% as refining margins collapsed. FY2026 (partial, ~66% reported) points the other way: same-store revenue +9% and PAT +19%, and the latest reliable quarter, Q3 FY2026 (Dec-2025), confirms it with same-store revenue +5% and PAT +30%. The exhibit below shows the turn. IOC's Q3 net profit rose more than fourfold to ~Rs12,126 crore (vs ~Rs2,874 crore a year earlier) on stronger refining margins — its reported 9M (Apr-Dec 2025) average GRM was US$8.41/bbl versus US$3.69/bbl a year earlier (core current-price GRM US$9.86/bbl) — and Reliance's O2C EBITDA grew ~15% YoY to ~Rs16,507 crore with fuel cracks running 60–100% above five-year averages after Middle-East supply disruption. The bounce is real.

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