IOC, BPCL and HPCL may suffer a loss of 10,700 crores, investors of these companies should be careful!
Highlights
- Crude oil prices rose but petrol and diesel prices were not changed
- Due to this these companies are losing Rs 12 to 14 per liter on petrol and diesel.
- Refining margin to remain strong at $17-18 per barrel
IOC, BPCL and HPCL News: State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) collectively incurred a loss of Rs 10,700 crore in the June quarter of the current financial year on sale of petrol and diesel below cost. It is possible ICICI Securities said in a report that crude oil prices rose in the April-June quarter. But the price of petrol and diesel was not changed. This caused losses to the companies at the marketing level. Market experts say that investors investing in the shares of these companies should be careful. In the short term, the stock of these companies may decline if the results are out.
Loss of Rs 12 per liter on petrol
These three public sector petroleum marketing companies control 90 per cent of retail sales of petrol and diesel. These companies also have their own refineries where crude oil is converted into petrol and diesel. Though margins for converting crude oil into fuel are high, marketing units have suffered as petrol and diesel prices remained unchanged. ICICI Securities said in the report that companies are losing Rs 12 to 14 per liter on petrol and diesel. This has eroded the benefits of higher margins at the refinery level.
Will not affect refining margin
“We expect gross refining margin to remain strong at $17-18 per barrel,” the brokerage company said. Also, the increase in marketing volume is likely to be 17 to 20 percent. The reason for this is the improvement in prospects and the weakening of the comparative base. It said that higher losses at retail level in case of petrol and diesel would result in loss of Rs 6,600 crore in terms of earnings before tax (EBITDA) in the first quarter of April-June of the current financial year. At the same time, the net loss of petroleum marketing companies is estimated to be Rs 10,700 crore.
will improve in the coming months
In the last two-three days, there has been some softening in the price of crude oil. In view of this, some relief is expected in the case of marketing losses in the coming days. Regarding Reliance Industries, the brokerage company said that the June quarter is expected to be better for the company at the operational and financial level. According to the report, the company’s consolidated profit before tax is expected to increase by 67 per cent to Rs 38,900 crore and net profit by 77 per cent to Rs 24,400 crore.
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