High marketing margins help trim OMCs’ debt by half
Oil marketing companies (OMCs) have raised marketing margins in a year of rising fuel prices, helping them reduce debt by nearly half in just a year.
For OMCs such as Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL), daily gross marketing margin on auto fuels now stands at over ₹3 per litre. The debt reduction thanks to better margins assumes significance against the backdrop of the current privatization of BPCL.
“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 Motilal Oswal in a 22 February note.
