HPCL Q3 Preview: Net Profit, Ebitda May Fall On Lower Refining Margins

While H1FY24 saw Indian oil marketing companies experience multi-year high refining and marketing margins, Q3FY24 is expected to be a weak quarter due to headwinds in both the marketing and refining segments.

Nomura expects OMC oil refining margins to decline sharply on a sequential basis in the third quarter, mainly due to the decline in middle distillate and gasoline spreads. The brokerage noted the sharp 43% QoQ drop in Benchmark Singapore refining margins. The fall in spreads could also be further impacted by inventory losses following the sharp downtrend in crude prices, the brokerage said.

Nomura expects Hindustan Petroleum's refining margins to be at $8 per barrel with an inventory loss of $2.5 per barrel. The brokerage expects the refiner's Ebitda to drop 54% QoQ to Rs 3,800 crore.

Though Kotak Securities expects a 6% QoQ improvement in revenue, it also expects a 54% decline in Ebitda. The brokerage also estimates a 67% drop in net profit on a sequential basis. Kotak assumes a gross refining margin of $7 per barrel and estimates an inventory loss of Rs 1,900 crore, with a loss of $3 per barrel in the refining segment and a loss of $1.25 per barrel in the marketing segment.