(Financial Express)
Oil marketing companies are expected to report a muted Q4 for FY25 due to weaker gross refining margins, with crude costs likely rising 4-5% in INR and frozen retail prices for diesel, petrol, and LPG impacting margins.
The country’s oil marketing companies are likely to report a muted fourth quarter for FY25, primarily due to weaker gross refining margins, analysts say. “For the oil marketing companies, we expect crude costs to rise 4-5% in INR terms. With retail prices frozen for diesel, petrol, and LPG—which together account for 80-85% of sales—the overall margins will be impacted,” said Kotak Institutional Equities in its quarterly preview.
With oil prices recovering towards the end of March, analysts do not anticipate significant inventory-related gains or losses for the quarter under review.“We expect reported GRMs to be weak year-on-year and on a quarterly basis for oil marketing companies, except for Indian Oil, as gross marketing refining in Q3FY25 was too low. Reported numbers will likely look stronger for IOCL due to a weak base, and weakest for BPCL,” the brokerage noted.
For upstream companies, analysts foresee weak production volumes, although crude price realisations are expected to improve due to a weaker Indian Rupee.“We expect ONGC’s Ebitda to rise ~11% year-on-year and by 2% sequentially on higher oil and gas realizations and a weaker Indian rupee. For Oil India, we expect Ebitda to increase 12.6% year-on-year but remain flat sequentially, driven by higher gas sales and a weaker Indian Rupee, partly offset by lower oil realisations. Volumes are likely to be weak for both,” Kotak Institutional Equities said.
Regarding state-owned gas major GAIL, analysts expect weakness in core businesses, with a recovery in the marketing segment. While margins for City Gas Distribution companies are set to recover due to improved availability of Administered Price Mechanism (APM) gas in the fourth quarter, they will remain subdued, analysts noted.“We expect GAIL’s Ebitda to decline 2% on-year but rise 23% quarter-on-quarter due to a low base. We expect transmission, LPG/LHC, and petchem segments to be weak quarter-on-quarter, but marketing should recover (very weak in Q3 due to one-offs),” the firm stated.
The brokerage expects Ebitda for Indraprastha Gas and Mahanagar Gas to recover 12-13% quarter-on-quarter but decline 10% year-on-year for MGL and 22% for IGL. “A partial reversal of the APM allocation cut in mid-January and higher APM availability in March (due to lower offtake by the fertilizer sector) would help,” analysts said.For Petronet LNG, analysts forecast a 10% sequential increase in adjusted Ebitda and a 19% year-on-year rise, driven by a low base effect from inventory valuation impact and a 5% annual tariff hike at the Dahej terminal.
