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Nirmal Bang Report
Losses on Indian oil marketing companies’ retail segment margins on motor spirit/high speed diesel are likely to ease following the recent decline in oil price - brent is down 8.5% month-on-month and 12% QoQ.
However, the high-HSD crude spread ($30-35/barrel of oil) is likely to keep HSD pump margins negative unless OMCs are able to raise diesel prices.
At the current brent price of $85/bbl and diesel spread range of $33/bbl, OMCs have to increase HSD pump prices by Rs 2/litre to break even and increase MS/HSD prices by Rs 3/litre each (excluding the impact of value added tax) to earn blended margin of at least Rs 1.5/litre (indicative estimates).
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