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State-run Indian Oil Corporation (IoCL) is expected to report a subdued performance in Q2 FY25, on an annual basis, on account of a hit on refinery margins.
According to JM Financial, oil marketing companies (OMCs) are likely to report a Q-o-Q improvement in EBITDA on robust auto-fuel marketing margin; that, though, will be partly offset by continued weak diesel cracks and higher inventory loss.
“We expect OMCs’ Q2 FY25 reported GRM (adjusted for $1.4-2.2 per barrel of crude inventory loss) to decline to $4.8-6.7 per barrel (vs. $5-7.9 per barrel reported in Q1 FY25) driven by continued weak diesel cracks ($12.8 per barrel in Q2 FY25 vs $13.9 in Q1 FY25) and crude inventory loss (of $1.4-2.2 per barrel) on account of sharp decline of $8.3 per barrel in Brent crude price (averaged at 74.3 per barrel in September 2024 vs. $82.6 in June 2024),” it added.
However, OMCs’ weighted average auto-fuel gross marketing margin rose to ₹6.4 per litre in Q2 FY25 (vs. ₹3.3 per litre in Q1 FY25), the brokerage said.
According to Prabhudas Lilladher “IoCL is likely to report weak operating profit due to decline in marketing margins (Rs 4.4 per litre vs Rs 8.7 per litre in Q1 FY25). We estimate a GRM of $12.4 per barrel.”
It expects OMCs results to be operationally weaker owing to sharp fall in marketing gains of petrol and diesel due to rise in benchmark prices.
Last week, State-run Bharat Petroleum Corporation (BPCL) reported an almost 73 per cent Y-o-Y drop in its consolidated net profit at Rs 2,297.23 crore in Q2 FY25 on account of lower refining and marketing margins. On a sequential basis, its net profit was down by 19 per cent.
BPCL’s average Gross Refining Margin (GRM) for April-September 2024 was $6.12 per barrel against $15.42 a barrel in the corresponding comparative period.
Similarly, State-run Hindustan Petroleum Corporation (HPCL) also last week reported that its consolidated net profit tanked by almost 98 per cent Y-o-Y to ₹143 crore for Q2 FY25 due to lower refining and marketing margins. On a sequential basis, its net profit was down by 78 per cent.
Its average GRMs for Q2 FY25 were $3.12 per barrel ($13.33 per barrel in Q2 FY24 and $5.03 per barrel in Q1 FY25), which is in line with the trend of international benchmark product cracks.
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