Firm marketing margins despite crude rally put OMCs in sweet spot
After posting decent December quarter results, state-run oil marketing companies (OMCs) have remained in the spotlight thanks to regular price hikes. OMCs include Hindustan Petroleum Corp. Ltd (HPCL), Indian Oil Corp. Ltd (IOCL) and Bharat Petroleum Corp. Ltd (BPCL). Shares of these companies have risen 8-20% so far in February.
OMCs have been consistently raising auto fuel prices in line with a rally in global crude oil prices. As a result, retail selling prices of fuel have touched all-time highs. Regular price hikes without any government intervention helped to keep their marketing margins intact.
“Even as retail prices for auto fuels in India touch record highs, OMCs are earning marketing margins of ₹2.8-3.6 per litre on petrol-diesel (higher than their long-term average of ₹3 per litre) due to regular price hikes,” said analysts at Motilal Oswal Financial Services Ltd.
