Indian Oil Company (IOC), Bharat Petroleum and Hindustan Petroleum could put up a mixed lack of Rs 10,700 crore in June quarter on promoting petrol and diesel at charges beneath value, a report mentioned on Monday.
Whereas the uncooked materials (crude oil) costs soared in April-June, petrol and diesel costs weren’t revised, resulting in advertising losses which offset robust refining margins, ICICI Securities mentioned within the report.
The three state-owned oil advertising firms, IOC, BPCL and HPCL, management 90 per cent of the retail petrol and diesel gross sales within the nation. Additionally they personal refineries that flip crude oil into gasoline corresponding to petrol and diesel.
Whereas margins on turning crude into gasoline have been excessive, the advertising wing accrued losses from unchanged petrol and diesel charges.
ICICI Securities mentioned the businesses are dropping Rs 12-14 per litre on petrol and diesel, fully offsetting the robust refining efficiency through the quarter.
“We estimate gross refining margins (GRMs) to stay pretty robust at $17-18 per barrel ranges (factoring in stock lack of $0.1-0.2 a barrel) and advertising quantity progress of 17-20 per cent, because of continued restoration in prospects and a weaker base,” the brokerage mentioned.
But, the sharply increased retail losses in petrol and diesel will “drive an EBITDA lack of Rs 6,600 crore and a internet lack of Rs 10,700 crore for the OMCs in Q1FY23E (April-June quarter of 2022-23 fiscal),” it mentioned.
Going ahead, with some decline seen in crude within the final 2-3 days and the resultant dip in key product spreads as effectively, some respite will probably be forthcoming for the advertising losses. “Nevertheless, the delta from GRMs will even cut back, which limits earnings triggers for FY23E (April 2022 to March 2023),” it mentioned.
For Reliance Industries Ltd, the brokerage noticed an operationally and financially robust quarter. It estimated a consolidated EBITDA/PAT of Rs 38,900 crore/Rs 24,400 crore (67 per cent year-on-year progress in EBITDA, 77 per cent in revenue after tax or PAT) – the very best ever.
“These all-time highs would come on the again of a large 80 per cent progress in oil-to-chemical section EBITDA, sharply increased (up 100 per cent) retail EBITDA, and EBITDA progress of 26 per cent for Reliance-Jio,” it mentioned including prospects for the following 9 months could be impacted by the estimated $8 per barrel hit from the upper duties on gasoline exports imposed with impact from July 1, 2022.