On February 1, 2025, shares of India’s state-owned Oil Marketing Companies (OMCs)—Hindustan Petroleum Corporation Ltd. (HPCL), Indian Oil Corporation Ltd. (IOC), and Bharat Petroleum Corporation Ltd. (BPCL)—experienced declines of up to 5%. This downturn followed the Union Budget 2025 announcements, which revealed a reduction in the LPG subsidy allocation for the upcoming financial year.
On February 1, 2025, shares of India’s state-owned Oil Marketing Companies (OMCs)—Hindustan Petroleum Corporation Ltd. (HPCL), Indian Oil Corporation Ltd. (IOC), and Bharat Petroleum Corporation Ltd. (BPCL)—experienced declines of up to 5%. This downturn followed the Union Budget 2025 announcements, which revealed a reduction in the LPG subsidy allocation for the upcoming financial year.
LPG Subsidy Allocation Reduced
The Union Budget 2025 documents indicated that the LPG subsidy for the financial year 2025 was allocated at ₹14,700 crore. However, this amount was decreased to ₹12,100 crore for 2026. This reduction has raised concerns among OMCs, as they have been absorbing significant losses due to selling LPG at subsidized rates.
Impact on OMCs
In the first nine months of 2025, OMCs faced LPG under-recoveries totaling ₹30,000 crore. Among them, Indian Oil reported under-recoveries of ₹14,325 crore, BPCL recorded ₹7,200 crore, and HPCL reported ₹7,600 crore in under-recoveries. The recent budget document did not provide any compensation for OMCs to offset these LPG losses.
Stock Performance
Following the budget announcements, shares of these OMCs declined:
- IOC: Down 2.9% to ₹125.7
- BPCL: Down 4.5% to ₹252.75
- HPCL: Down 6% to ₹342.15
These declines reflect investor concerns over the reduced subsidy allocation and the potential financial impact on these companies.
The reduction in LPG subsidy allocation in the Union Budget 2025 has raised concerns for India’s state-owned OMCs, leading to declines in their stock prices. The absence of compensation for LPG losses in the budget further exacerbates these concerns, highlighting the need for strategic measures to support the financial health of these companies.
