-
OMCs face Rs 50 billion in under-recovery in Q4FY23: Nomura
Oil marketing companies (OMCs) such as Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and Indian Oil (IOCL) may have to bear an under-recovery of Rs 50 billion (Rs 50 billion) on the sale of auto fuels in the fourth quarter of this fiscal, brokerage firm Nomura has said.
This is significantly lower than the under-recovery numbers reported earlier in the fiscal when the OMCs were estimated to have borne under-recoveries of up to Rs 1 trillion in 9MFY23.
The improvement in the bottom line was thanks to a fall in crude prices but the brokerage’s analysts do not believe it will last in the near term and have retained their reduce rating on all three stocks.
While blended marketing margins are looking better, on a week on week (Rs 3.3/litre versus Rs 0.7/litre) and quarter-to-date over the previous quarter (Rs 1.7 versus Rs 1.4), they may lose their buoyancy once global demand recovers, the report said.
“Based on current crude and product prices, blended marketing margins are at super-normal levels of INR4.4/liter, albeit these are unlikely to sustain in the near-term, in our view, underpinned by a strong global diesel demand and inventory drawdowns in the EU as the bloc is unable to fully offset the supply disruption from Russia,” they wrote in the recent “Energy markets in flux” report.
Share This
