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State oil firms’ credit profile to improve a tad in FY20
Financial profiles of state-owned oil marketing companies would improve marginally in FY20 driven by higher Ebitda and better gross refining margins (GRM), India Ratings and Research has said.
The rating agency projects combined gross leverage of the three large state-run OMCs — Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum — to be between 1.9x and 2.2x during FY20 compared with 2.5x of FY19 and 2.5x in FY18. However, any higher-than-expected shareholder payout or subsidy receivable could have a negative impact on the expected credit profile, it added.
Hopes of a stable government and a strong March 2019 quarter helped by record marketing margins have driven a 10-12 per cent rally in shares of IOC, BPCL and HPCL since January 1.
IOCL and HPCL gained 12 per cent since the beginning of the year while BPCL rose 4 per cent as against 9 per cent Sensex return. Ind-Ra expects shareholder returns including dividends and share buybacks, which increased to ₹223 billion in FY19 to reduce in FY20.
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