HPCL, BPCL, IOC shares gain up to 2% as Cabinet approves ₹30,000 crore subsidy to compensate for LPG losses

Shares of three oil marketing companies, including Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), edge higher on Monday, August 11, as the Cabinet approved a ₹30,000 crore LPG subsidy to state-run oil companies to compensate for losses incurred from selling LPG at below cost over the past 15 months.

The compensation to oil marketing companies (OMCs) will be paid in 12 tranches, as per an official statement.

The international prices of LPG were at high levels during 2024-25 and continue to remain high. However, to insulate consumers from fluctuations in international LPG prices, the increase in cost was not passed on to consumers of domestic LPG, leading to significant losses for the three OMCs.

Despite the losses, public sector oil marketing companies have ensured continuous supplies of domestic LPG in the country at affordable prices.

This compensation will allow OMCs to continue meeting their critical requirements, such as crude and LPG procurement, servicing of debt, and sustaining their capital expenditure, thereby ensuring an uninterrupted supply of LPG cylinders to households across the country, it added.

The distribution of the compensation within the OMCs will be done by the Ministry of Petroleum and Natural Gas.

"This step also underlines the government's commitment to protect consumers from volatility in global energy markets while maintaining the financial health of these PSU OMCs," the statement said.

Shares of HPCL surged over 2% to an intraday high of ₹418 in Monday's early session. Last seen, it was trading at ₹414.15 per share on the National Stock Exchange, rising 1.14%.

BPCL shares gained 3.3% in the opening session to a high of ₹330 apiece on NSE. At the time of writing the article, it was trading 0.39% up at 320.70 per share.

Meanwhile, IOCL shares were trading at ₹141.49 apiece, rising 1.13% in the early session. It had surged over 2% to its intraday high.

The Q1 FY26 profit is more than half of the full FY25 earnings, which were at ₹6,735.70 crore. However, the company's turnover remained stable during Q1 FY26 at ₹1.20 lakh crore as against ₹1.21 lakh crore in the June quarter of FY25.

HPCL earned $3.08 on turning every barrel of crude oil into fuels, like petrol and diesel, in its refineries in the April-June quarter, as compared to a gross refining margin of $5.03 per barrel in Q1 FY25.

Meanwhile, BPCL and Indian Oil Corporation are expected to announce their Q1 earnings on August 13 and 14, respectively.