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Informist, Thursday, Jun. 4, 2026

 

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--Moody's: India oil marketing cos most exposed to oil shock in South Asia
--CONTEXT: Comments by Moody's Ratings analysts at a webinar
--Moody's: India oil cos' earnings under pressure from high energy prices
--Moody's: Don't see rating pressure for nationalised oil cos in South Asia
--Moody's: India FY27 growth forecast of 6% incorporates weaker monsoon
--Moody's: Domestic demand remains robust in India
--Moody's: Comfortable with 6% forecast for India FY27 growth despite risks

 

NEW DELHI – Moody's Ratings is comfortable with its forecast of 6% GDP growth in India in 2026-27 (Apr-Mar) despite risks from the ongoing war in West Asia and a weaker monsoon. "The 6% (growth forecast) does already incorporate a prolonged conflict and higher oil prices, as well as the prospects for a weaker than in recent years monsoon," said Christian de Guzman, senior vice president - manager, sovereign and sub-sovereign risk, Moody's Ratings.

 

Analysts at Moody's see the war in West Asia persisting "through autumn", which adds to downside risks to India's GDP growth. In April, the rating agency lowered its India growth projection for FY27 by 80 basis points to 6.0% due to the West Asia war, which has entered its fourth month. Despite the war, India is seeing robust demand in the domestic market, de Guzman said in a webinar.

 

The Indian economy grew 7.8% in the December quarter, based on the new GDP series. The government's second advance estimate has projected FY26 GDP growth at 7.6%.

 

OIL COS OUTLOOK

The West Asia war has bruised supply chains and energy prices globally and India's story is no different. India is dealing with the worst energy crisis in decades, as about 45% of the country's crude oil imports pass through the Strait of Hormuz. India has now diversified its crude import sources, with about 70% of crude imports coming from countries that are not in West Asia.

 

After absorbing the brunt of higher crude oil prices for two months, oil marketing companies passed on a hike of around INR 7.5 per litre of petrol and diesel to customers in May. "In India, oil marketing companies such as Indian Oil Corp Ltd. and Hindustan Petroleum Corp. Ltd. are bearing the fuel subsidy burden instead of the government," said Nicky Dang, senior vice president, credit strategy and guidance group at Moody's. "Thus, we view them to be the most exposed in this region because their earnings are under pressure from higher crude (oil) and gas prices."

 

India is highly dependent on energy imports. "The oil marketing companies are essentially importing crude liquefied petroleum gas at international prices, processing it, but selling petrol, diesel, LPG, and jet fuel in India, at prices controlled by the government," analysts said. 

 

Moody's sees these oil marketing companies in India as "pretty solid" in terms of primary utilisation rates. Given their strategic importance to the country, analysts expect the government's support to these companies will act as a buffer embedded in the final ratings of the oil marketing companies. "But that being said, we're not even expecting pressure on the standalone credit strength of these companies in these markets," analysts said.

 

However, fuel subsidies are temporary and not structural under Moody's base case. "Hence, our expectation is their financial profile will eventually recover over the medium term," Dang said.  End

 

Reported by Shubham Rana and Shweta

Edited by Avishek Dutta

 

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