Edible Oil Sector May See 2–3% Revenue Dip in FY26, Says Crisil; AWL Agri , Patanjali Shares in Focus

India's edible oil refining industry is expected to face a modest revenue decline of 2–3% in FY26, despite a steady rise in consumption volumes. According to a recent Crisil Ratings report, lower price realisations will offset the gains from volume growth.

However, stable working capital needs and reduced capex are likely to preserve credit stability for refiners.

Revenue to Decline Despite Higher Demand

Edible oil refiners are likely to see their revenues fall to approximately ₹2.6 lakh crore in FY26, down 2–3% year-on-year. This comes despite a projected 2.8–3.0% rise in overall volumes to 25.5–26 million metric tonnes. The decline is attributed to lower realisations across key oil categories, primarily driven by falling global prices and inventory cost mismatches.

Margins to Be Squeezed Amid High Inventory Costs

Operating margins are expected to contract by 30–50 basis points, settling at 3.3–3.5%. The report notes that refiners are currently holding high-cost inventories of crude oil, with a typical lag of 40–50 days between procurement and retail realisation. Although retail prices adjust within 15–25 days, companies may not be able to fully pass on the cost burden, leading to temporary margin pressure.

Volume Growth Across Segments

Crisil Ratings Director Jayashree Nandakumar highlighted that demand is rising across multiple channels households, HoReCa (Hotels, Restaurants, and Catering), and food processing. This broad-based demand will partly offset falling realisations, although it may not be enough to prevent an overall revenue dip.

Import Mix and Government Policy Influence Pricing

India imports over 60% of its edible oil needs, with crude palm oil alone accounting for more than half. Prices for key imported oils like crude sunflower and palm oil are expected to soften, while soybean oil prices may rise slightly due to higher biodiesel demand.

The government’s recent move to widen the duty gap between crude and refined oils by reducing duties on crude oils and maintaining them on refined variants aims to support domestic refiners and stimulate demand.

Industry Outlook Remains Stable

Despite the revenue and margin headwinds, Crisil Ratings suggests that the sector’s credit outlook remains stable. Lower capital expenditure and steady working capital needs will help companies maintain their financial health, even with near-term profitability challenges.

Adani Wilmar and Patanjali Foods in Focus

AWL Agri and Patanjali Foods, two of the largest listed players in the edible oil segment, are likely to be in focus as the sector navigates pricing and margin pressures. Both companies import crude edible oil such as palm, soybean, and sunflower oil which they refine and sell under consumer brands. This makes their financial performance closely tied to global edible oil prices, duty structures, and domestic demand trends.

Read More: Edible Oil Prices Set to Dip: 5%–6% Drop Expected After Duty Reduction.

Conclusion

The edible oil sector is entering FY26 with a mix of steady demand and pricing pressure. While falling realisations are expected to weigh on revenues and margins, a supportive policy environment and disciplined financial management should help refiners maintain stability. The short-term outlook may be tight, but structural fundamentals remain intact for the sector.

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