The oil price rise may be hitting the fuel consumers hard, but it is the oil companies that are making the most from the current situation, strengthening their margin on the sale of petrol and diesel and jacking up profits.
At the current historic high of fuel price levels in the country, the margin taken by the oil marketing companies (OMCs) on the retail sale of petrol and diesel has touched a high of around Rs 3 per liter.
What this means is that while rising fuel prices burn a bigger hole in the consumer’s pocket, the OMCs are increasing their earnings and getting a lift in the current difficult environment created by the Covid-19 pandemic.
According to a research report from ICICI Direct, all oil marketing companies are expected to strengthen their earnings in the April-June quarter of FY22 on the back of rising marketing margin and improved gross refining margin. Though the profit of companies is expected to fall quarter-on-quarter due to exceptional gains made by some of the companies in the January-March period, as on a YoY basis, they would make more money in Q1.
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As per the brokerage report, privatization bound BPCL is expected to report a net profit of Rs 2,307.7 crore, down 80.7 percent QoQ as the company reported exceptional gains of Rs 6,993 crore in Q4FY21.
Similarly, HPCL is expected to report a robust profit in Q1 at Rs 1,520.7 crore. Though this is down 49.6 percent QoQ, it is still very good considering if Q1 also saw the most devastating phase of the Covid virus that disrupted economic activity and resulted in a fall in marketing volumes for fuel marketers.
With regard to IOC, the estimate is its profit PAT has estimated at Rs 5,480.3 crore, down 37.6 percent QoQ but the company would improve gains due to a rise in marketing margin during the quarter.
For all the OMCs the gain is coming in wake of the regular revision of the retail price of petrol and diesel since the beginning of the financial year on April 1. Since then, the pump price of petrol had increased by up to Rs 11 per liter while diesel by Rs 9 per liter. This as per analysts may have hurt fuel consumers but has pushed up marketing margins for OMCs back to about Rs 3 a liter. This means companies are gaining from the rise more than expected.
SOURCE: IANS
