A total net profit of Rs 27,295 crore was reported by state-run oil refiners in Q2

 A total net profit of Rs 27,295 crore was reported by state-run oil refiners in Q2

In contrast to the net loss of Rs 272 crore during the same time previous year, Indian Oil, the largest refiner in the nation, reported a consolidated net profit of Rs 12,967 crore in the second quarter. For the quarter that concluded on September 30, Bharat Petroleum and Hindustan Petroleum reported combined net earnings of Rs 8,501 crore and Rs 5,827 crore, respectively.

In the second quarter, state-owned oil marketing firms (OMCs) reported a combined net profit of Rs 27,295 crore.

In the second quarter of the fiscal year 2023–24, state-run oil marketing companies (OMCs) recorded a combined net profit of Rs 27,295 crore, making a profit again. The high cost of crude oil caused the refiners to report losses in the previous year.

The corporations Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) surpassed market forecasts and returned to profitability in the second quarter thanks to healthier marketing margins.

In the second quarter of this year, Indian Oil, the largest refiner in the nation, reported a consolidated net profit of Rs 12,967 crore, up from a net loss of Rs 272 crore during the same time the previous year. For the quarter that concluded on September 30, Bharat Petroleum and Hindustan Petroleum reported combined net earnings of Rs 8,501 crore and Rs 5,827 crore, respectively.

With the robust H1FY24 that has been reported so far, OMCs are in a great place, notwithstanding certain macro concerns related to oil prices and the current political climate leading up to the elections. We maintain our HOLD position with a constant target price of Rs 100 and increase FY24E EPS by 9%, according to a report released by Emkay Global after the results of Indian Oil.

However, because of an 11% increase in crude oil prices from the prior quarter, the refiners' earnings fell sequentially. After cooling down in the first half of 2023 due to supply cuts by Russia and Saudi Arabia, crude prices have been rising since July. In an attempt to drive up prices, Russia curtailed exports by 3,000,000 barrels per day (bpd) while Saudi Arabia decreased output by 1 million bpd starting in July and continued the reduction throughout the year.

In the first quarter of FY24, the three oil refining businesses' aggregate net profit was Rs 32,147 crore. Prabhudas Lilladher said in a BPCL post-results report that "marketing sales for Q2 were 12.2 mmt, in-line with assumptions." Implied gross margins from marketing were Rs 4.5/ltr (or six per liter). Due to an increase in benchmark gasoline and diesel prices as well as an inability to pass on rising fuel costs, margins decreased by 36% quarter over quarter. In light of future elections, we project margins of Rs 5.6/4.1/4.1ltr for FY24/25/26E."

Even though the price of petroleum is now trading at around $85 per barrel, OMCs are anticipated to maintain gasoline prices steady due to the impending elections throughout the nation. The Minister of Petroleum and Natural Gas, Hardeep Singh Puri, said that while OMCs have been profitable in the last few quarters, they are still claiming under-recoveries in a recent interview with media.

According to Motilal Oswal, OMCs are expected to have made a marketing loss of Rs 3.8 per litre on diesel and a marketing margin of Rs 8.2 per litre on gasoline so far in the third quarter. OMCs are unlikely to lower gasoline and diesel prices in the nation given that oil prices are now over $80 per barrel. The price of fuel has not changed since April 2022.