OMCs Update - Earnings Recovery Continues: Prabhudas Lilladher

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Prabhudas Lilladher Report

In Q3 FY23 oil marketing companies turned profitable at Rs 27.4 billion after H1 FY23 losses of Rs 227 billion given-

improvement in marketing margins (blended marketing loss Rs 1.6/litre) and
healthy refining margins at $9.1- 15.9/barrel of oil.

A year into the Ukraine-Russia war has led to high energy prices resulting in steep losses and severe OMCs underperformance (5-25%). However, oil and product prices are now down by 12-18% versus last year.

Going forward, we expect OMCs to report profits of ~Rs 128 billion in Q4 FY23, based on current marketing margin trends and stock performance to reflect improving fundamentals.

We maintain our estimates, recommendations and reiterate a positive stance on the sector.

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Prabhudas Lilladher Oil&Gas Sector Update.pdf

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Also Read: India's Gas Sector Sees Stronger Tidings In FY24E: ICICI Securities

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