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Indian oil marketing companies are thriving amid global volatility: HSBC
The Indian oil marketing companies have thrived in a volatile global market, with support from the Indian government, HSBC Research said in a research note. According to HSBC, oil marketing companies have witnessed volatility in refining margins over the last six months, a potential risk in the U.S., which has prompted India to reduce its purchases of Russian crude oil and the depreciation of the Rupee against the U.S. dollar.
However, the Indian government has been backing oil marketing companies by supporting decisions which are in the best interests of the companies. Even in August, India imported 1.3 mbpd of Russian crude oil and promised to pay LPG under-recovery, which was incurred in FY24. All these factors, according to HSBC, have culminated in stocks of oil marketing companies rising by 14–23% in the last six months, whereas the Nifty50 has gained 12% in the same period.
The HSBC note also adds that the refining margin of oil marketing companies had expanded in the interim period, and the depreciation of the Indian rupee ate away some of the marketing margins. Despite these headwinds, the combined margins have remained steady at $22–25/bbl, higher than HSBC’s full-year estimates
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