More Stories

Informist, Tuesday, Jul. 15, 2025

NEW DELHI – Indian edible oil refiners are set to see a marginal 2–3% decline in revenue to INR 2.6 trillion in 2025-26 (Apr-Mar) due to weaker price realisations, Crisil Ratings said. Revenue for the sector is projected to fall, even as volumes rise by 2.8–3.0% amid sectoral challenges. However, increased volume growth will partially offset lower realisations, it added.

The decline in realisations comes amid lower international prices of crude palm oil and sunflower oil. However, soyoil may see some firmness due to rising biodiesel demand. In addition, the Indian government reduced the basic customs duty on crude edible oils to 16.5% from 27.5%, while retaining duties on refined oil at 35.75%, further weighing on realisations. 

The widening duty differential between crude and refined oils aims to protect domestic refiners from cheaper refined imports. However, this is likely to pull down price realisations by around 4.5–5.0% in FY26, but support demand growth, Crisil said. 

"Volumes are seen growing steady at 2.8-3.0% this fiscal to 25.5-26.0 million tonnes, a tad higher than the average of 2.7% in the five years through fiscal 2025," said Jayashree Nandakumar, director, Crisil Ratings. "Demand is seen growing across segments, including household, HoReCa (hotel, restaurant, and catering), and food processing, amongst others," he added. 

Despite the volume growth across segments, the industry revenue may still decline by 2-3% in FY26. Declining revenues will also increase profitability challenges for companies due to their high carrying cost of crude oil inventory for 40-50 days, Crisil said. 

"Although demand remains healthy, with a decline in realisations, players will be able to pass on only a part of the high-cost inventory to consumers...Branded players, who typically hold higher inventory compared to their non-branded counterparts, will be more impacted," said Rishi Hari, associate director, Crisil Ratings.

The moderation in prices is also likely to shrink operating margins by 30–50 basis points to 3.3–3.5%, Crisil said. These projections are based on an analysis of 82 Crisil-rated edible oil refiners, which account for about 40% of the industry's revenue. 

Despite the expected dip in margins and revenue, credit profiles are seen as stable, as players are expected to avoid large debt-funded capex this fiscal year, with capacity utilisation remaining at 70-80%, Crisil said. Debt servicing metrics, such as net cash accrual to total debt and interest coverage, are both expected to remain adequate at 0.11 times and 2.4 times, respectively, it added. 

Meanwhile, total outside liabilities to adjusted net worth are expected to stay rangebound at a steady 1.5–1.7 times over the medium term. However, increased freight costs due to geopolitical tensions in West Asia could push up landed costs and provide a marginal lift to realisations, Crisil said. Changes in the global trade environment and India's import duty regime will remain key monitorables for the sector, it added. End

Reported by Afra Abubacker

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.