Shares of HPCL, BPCL and IOCL are in focus heading into Friday's trade after the three oil-marketing companies announced Rs 3 hike in petrol and diesel prices, in an attempt to recoup a fraction of the losses they have had to incur in the wake of elevated crude prices.
This is the first time these state-run OMCs have hiked prices since April 2022 and could go a long way in recovering some of the Rs 1-1.2 lakh crore losses these companies are staring at in the first quarter of financial year ending March 2027.
Needless to say, the move will benefit BPCL, HPCL and IOCL, though it may not completely help them reach breakeven point.
In fact, a Rs 3 per litre hike helps them recoup only Rs 125 crore per day, a far cry from the estimate daily loss of Rs 1,100-1,300 crore.
In order to totally recoup the losses and reach break-even on their marketing margins, these companies must hike petrol prices by Rs 28/litre more, accounting for a gap of 29.5%. Similarly, OMCs need Rs 32/litre more hike in diesel prices to reach full cost recovery - a 36.5% shortfall.
According to brokerage data compiled by NDTV Profit, every half a rupee per litre increase in fuel marketing margins is estimated to lift Ebitda by 7% for IOCL, 8% for BPCL and 11% for HPCL.
Keeping that in mind, the Rs 3 per litre hike announced by the three state-run oil marketers translates to a six-unit increase in the Rs 0.5/litre metric, meaning the total improvement to Ebitda could be roughly six times those per-unit estimates.
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