New Delhi, Sept 16: A report indicates that decisive government initiatives have enabled Indian oil marketing companies (OMCs) to prosper despite a volatile global environment, including currency depreciation and US pressure to reduce Russian oil intake.
OMCs have benefited from government support, such as promises to cover LPG under-recoveries and decisions favoring their commercial interests, leading to OMC stocks outperforming the NIFTY50. Combined refining and marketing margins have remained strong at $22-25 per barrel, exceeding estimates and providing a safety margin.
Future oil surplus and potential downward revision of oil price forecasts offer further support. Auto fuel demand continues to grow, with gasoline up 5.5% and diesel up 1.2% year-on-year, though ATF demand is declining. OMCs are expanding their outlets, including EV charging stations, and the government’s acknowledgment of their capital expenditure needs suggests a reluctance to significantly alter duties, thus protecting margins. A downside risk in oil prices is also seen as supportive of earnings.
