Oil marketing companies (OMCs) in India will find support with international crude oil prices sustaining below the $80 per barrel mark in the near-term. The three OMCs – Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) reported decent earnings growth in the July-September quarter of fiscal 2023-24 (Q2FT24) with improved gross refinery margins.
Domestic brokerage firm JM Financials said in its report that OMCs’ gross auto-fuel marketing margin has jumped to ₹7.9per liter compared to the historical margin of ₹3.5/liter and gross auto-fuel integrated margin has risen to ₹16.8/liter compared to the historical margin of ₹11.3/litre.
”Optimism on OMCs will be contingent on crude sustaining below ~$80/bbl with OMCs’ FY24 P/B valuations (at ~0.9x for HPCL/IOCL and 1.1x for BPCL) being only 10 per cent discount to historical average after recent rally,” said JM Financials.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) will meet for its next oil output policy decision on November 26, to consider whether to make additional oil supply cuts.
Saudi Arabia and Russia have extended their combined oil output cut of 1.3 million barrels per day (bpd) until the end of the year, which the oil majors first announced in July 2023, in a bid to support the stability of the oil market.
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