Indian refiners continue to sit in a sweet spot as global product cracks, particularly diesel and ATF, remain elevated amid supply dislocations, with ICE gasoil premiums still hovering close to $17/bbl.
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Global refining dynamics remain favourable for Indian refiners, with middle distillate cracks (diesel/ATF) sustaining strength above $17/bbl amid tight inventories, and renewed demand in the West.
At the same time, China's reported push to consolidate its refining sector by shutting smaller teapots and upgrading outdated capacity is more of a structural realignment than a meaningful supply cut, ensuring global balances remain tight in the near term.
Against this backdrop, Indian refiners in Q2 FY26, especially Chennai Petroleum Corporation Ltd. and Mangalore Refinery and Petrochemicals Ltd., are well-positioned to capture elevated gross refining margins $7.3-7.5/bbl (based on Indian basket) versus Singapore's ~$4.1/bbl), aided by flat crude prices and a return of higher Russian crude sourcing with higher discounts.
Our top picks include CPCL > MRPL while amongst the OMCs, BPCL followed HPCL. RIL could gain from higher GRMs in their O2C segment.
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