IOC, BPCL, HPCL may post ₹10,700 cr. loss in Q1, says ICICI Securities
The Hindu
‘Selling at rates below cost leading to marketing losses’
Indian Oil Corporation (IOC), Bharat Petroleum and Hindustan Petroleum may post a combined loss of ₹10,700 crore in the June quarter on selling petrol and diesel at rates below cost, ICICI Securities said in a report released on Monday.
While raw material - crude oil - prices soared in April-June, petrol and diesel prices were not revised in tandem, leading to marketing losses which offset strong refining margins, it said.
The three state-owned oil marketing companies -- IOC, BPCL and HPCL -- control 90% of the retail petrol and diesel sales in the country. They also own refineries that turn crude oil into fuel such as petrol and diesel.
While margins on turning crude into fuel have been high, the marketing wing accrued losses from unchanged petrol and diesel rates.
ICICI Securities said the companies were losing ₹12-14 per litre on petrol and diesel, completely offsetting the strong refining performance during the quarter.
"We estimate gross refining margins (GRMs) to remain fairly strong at $17-18 per barrel levels (factoring in inventory loss of $0.1-0.2 a barrel) and marketing volume growth of 17-20%, thanks to continued recovery in prospects and a weaker base," the brokerage said.
Yet, the sharply higher retail losses in petrol and diesel will "drive an EBITDA loss of ₹6,600 crore and a net loss of ₹10,700 crore for the OMCs in Q1FY23E (April-June quarter of 2022-23 fiscal)," it added.