Margins of oil marketing firms like Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. could expand in the third quarter of financial year 2025, as per CLSA.
A rise in the blended marketing margins for petrol and diesel is one of the reasons behind this.
Here's What Has Been Working In Favour Of Oil Firms In Q3:
Gross Marketing Margins
Owing to lower crude prices and fixed retail prices of petrol and diesel, CLSA noted that blended marketing margins for petrol and diesel in third quarter so far stood at Rs 8.6 per liter. This marks a 60% increase from the average blended margin of Rs 5.4 per liter in the last quarter.
As per Prabhudas Lilladher Pvt., the gross marketing margins on petrol and diesel at the start of December 2024 stood at Rs 13.6 and Rs 9.7 per liter, respectively. This compares to Rs 9.8 and Rs 6.3 per liter margins on petrol and diesel in the second quarter.
Refining Segment Recovering
Indian Oil, Bharat Petroleum Corp. and Hindustan Petroleum Corp. could also see better results in the refining segment of the business. As per CLSA, the Asian benchmark for gross refining margins is currently $1.4 per barrel higher in the third quarter.
Similarly the brokerage's market for the Indian companies also sees a gain of $1.3 to $1.7 per barrel. This stands positive for results.
Some Relief On LPG Losses
Due to government policies, the Indian oil marketing firms have been seeing heavy losses on LPG during this fiscal. As per CLSA, oil firms could see higher losses of Rs 107 per cylinder in the third quarter, compared to Rs 90 in the first quarter. While analysts and the firms do expect relief from the government soon, no announcement regarding the same has been made yet.
However, these losses could partially be offset by the gains in the marketing segment. As per Prabhudas Lilladher, a rise of Rs 1.7-1.8 per liter in petrol or diesel margins can help compensate a $1 decline in gross refining margins, as well as a loss of Rs 100 per cylinder in the LPG segment.
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