Shares of major Indian oil marketing companies (OMCs) — Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), and Indian Oil Corporation Ltd (IOC) — experienced a notable decline on Friday, May 15, 2026. This dip occurred despite a recent Rs 3 per litre increase in petrol and diesel prices across the country, indicating investor disappointment over the hike's perceived inadequacy.
BPCL saw its shares fall by 2.91 percent, closing at Rs 286.50. HPCL shares dropped 2.4 percent to Rs 368.05, while IOC shares declined 1.73 percent to Rs 137.83. The market's negative reaction suggests that investors had anticipated a more substantial price adjustment to help offset the significant losses currently faced by OMCs.
Under-Recoveries Weigh Heavily on OMCs
The primary reason for investor dissatisfaction stems from the substantial under-recoveries OMCs incur on the marketing of auto fuels and LPG. These losses are estimated to be around Rs 30,000 crore monthly. Analysts had indicated that a much steeper price hike was necessary for these companies to reach a break-even point.
According to Emkay Global, under-recoveries are pegged at Rs 17-18 per litre, even after excise duty cuts of Rs 10 per litre implemented on March 27. This translates to an estimated quarterly loss for OMCs of Rs 57,000-58,000 crore.
Expert Perspectives on Fuel Price Hikes
Antique Stock Broking, in a May 12 note, reported that government officials suggested only moderate price increases for petroleum products. The rationale was to mitigate inflationary pressures, as a 10 percent rise in crude oil prices, if fully passed on, could lead to a 50 basis point increase in inflation and a 15 basis point reduction in economic growth.
However, market expectations, as cited by Nomura on Thursday, leaned towards a Rs 5 per litre increase based on media reports, suggesting fuel price hikes were imminent. Nomura further estimated that a Rs 15-20 per litre increase is required for OMCs to cease incurring losses. The firm also noted that petrol and diesel collectively account for 4.8 percent of India’s Consumer Price Index (CPI) basket, implying that a 5 percent price increase could add approximately 25-30 basis points to headline inflation.
New Fuel Prices in Major Metros
Following the adjustment, petrol prices in Delhi rose to Rs 97.77 per litre from Rs 94.77, while diesel increased from Rs 87.67 to Rs 90.67. Across other major cities, the increases ranged between Rs 2.83 and Rs 3.29 per litre. For instance, petrol is now priced at Rs 108.74 in Kolkata, Rs 106.68 in Mumbai, and Rs 103.67 in Chennai. Diesel prices stand at Rs 95.13 per litre in Kolkata, Rs 93.14 in Mumbai, and Rs 95.25 in Chennai.