"With net margin at Rs 3.28/l in Q3FY21 till date, Rs 3.78/l on November 3 and Rs 4.78/l at latest prices, it appears likely that net margins would be higher than our FY21 estimate of Rs3.3/l," ICICI Securities projected in its report on the oil sector.
What is more, OMCs are also seeing an increase in consumption of petrol and diesel as unlock of the. economy post Covid-19 related lockdown a has kicked up demand for fuel as economic activities pick up. This means that at OMCs May gain further from Increased volumes in addition higher net margin available on the products.
According to the brokerage, in September 2020, consumption of petroleum products was down just 4 per cent YoY (19 per cent in H1FY21), diesel down 6 per cent YoY (down 25 per cent YoY in H1), while petrol was up 3 per cent YoY (down 21 per cent in H1). In October 2020, petrol consumption was up yet again at 4.2 per cent YoY, even diesel was up 6.6 per cent YoY.
The report said that though weak gross refining margin (GRM) and diesel cracks are a concern for OMCs, underlying data is improving especially with inventories declining. Even in India, petrol and diesel inventories continue to fall. This augurs well for OMCs; their valuations are cheap and dividend yield high.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.