Retail fuel margins propel oil PSUs' Q1 net up 2.5-fold
,
Hindustan Petroleum Corporation
(HPCL) and
Bharat Petroleum Corporation
(BPCL) posted a combined profit of ₹16,184 crore in the quarter to June, an increase of more than two and a half times year-on-year, buoyed by extraordinary retail margins on petrol and diesel despite heavy inventory losses.
Petrol earned the state-run oil marketers an estimated ₹10.3 per litre at the pump, up from ₹ 4.4 a year earlier, while diesel fetched ₹8.2 per litre versus ₹2.5, according to brokerage ICICI Securities. These gains came from a domestic price freeze even as international fuel prices slid - crude down 21 per cent , petrol 18 per cent and diesel 16 per cent , as per petroleum and natural gas ministry data.
The sharp fall in crude, however, inflicted large inventory losses, eroding refining margins.
Indian Oil Corporation
alone booked an inventory loss of ₹6,465 crore in the June quarter against a gain of ₹3,345 crore in the year-ago period. Its gross refining margin (GRM) fell to $2.15 a barrel from $6.39. Adjusted for inventory swings, GRM improved to $6.91, compared with $2.84 last year.
Analysts expect strong marketing margins to persist if crude prices remain soft and domestic pump rates stay unchanged. But refiners face headwinds as imports of discounted Russian oil become less certain and price discounts narrow, eroding the crude-cost advantage. Companies are also diversifying their crude basket to manage supply risks. Discounts on Russian crude have shrunk to $1.5-2 per barrel, according to industry executives.
Some Indian refiners are delaying orders for September-loading Russian oil cargoes as they await clarity on how US President Donald Trump's proposed 25 per cent oil purchase-linked penalty will play out. The penalty takes effect on August 27, and some refiners are unwilling to take chances.
For refiners, additional earnings support in this quarter could come from the government's decision to release ₹30,000 crore to compensate oil companies for LPG under-recoveries.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
15 minutes ago
- Mint
US tariffs a ‘major shock' but opportunity for India to ‘get out of comfort mindset', says Uday Kotak
Uday Kotak has joined the chorus calling on the Centre to channel budgetary support towards MSMEs, in order to brace against impact from United States President Donald Trump's hiked tariffs. Speaking to the Financial Times (FT), the billionaire industrialist and founder of Kotak Mahindra Bank, said the development is an 'opportunity' for India to 'get out of our comfort mindset' and expand support for small and medium entreprises. Uday Kotak said the hiked US tariffs came as a 'major shock' to many Indians, who 'woke up' to the impact of Donald Trump's trade war on the domestic economy. 'We (India) must think about this as an opportunity for us to get out of our cruise mindset and from a comfort mindset to 'we are at risk',' he told FT. He said that direct monetary support — capital, private equity and risk capital — from the government to small and medium industries would 'turbocharge' manufacturing, research and technology in India. According to Kotak, the tariff uncertainty has created urgency to 'transform India' and pivot, stating, 'India's macroeconomic situation is very comfortable. Our fiscal deficit is under control, our current account is under control, you've got macroeconomic stability. Policymakers and businesses should use the trade war to get focused on productivity, efficiency, excellence and building world-class brands.' He added that India with per capita GDP of $2,700, 'cannot be in a comfort zone', when compared to China ($13,000) and US ($89,000). 'At the current 'cruise' level, we'll keep on improving our position, but is it fast enough for us to get past the middle-income trap? I think there's a gap,' Kotak told the publication. Donald Trump last month announced that the US would charge India a total of 50 per cent tariffs — 25 per cent reciprocal duties and an additional 25 per cent as 'punishment' for trade with Russia amid the Ukraine invasion. In light of this, earlier in August, Mahindra Group Chairman Anand Mahindra also called on the government to direct liquidity towards MSMEs; and RPG Entreprises Harsh Goenka also expressed support for a fund to help exporters shift from China and find new markets.
Mint
15 minutes ago
- Mint
GST Reform Boost: Nifty FMCG index jumps 4% in 3 days — Is this the sector's big comeback & which stocks to buy?
GST Reform Impact: The proposed revision in GST reforms, through a two-tier tax structure and lower tax rates on household goods, has driven not only the Indian stock market but also the fast-moving consumer goods (FMCG) segment. Amid ₹ 1.98 lakh crore consumption boost expected from the GST rate rejig, the Nifty FMCG index has been caught in an uptrend, rallying nearly 4% during the three days till Wednesday, August 20. According to analysts, Q1 FY26 marked a turning point for FMCG companies, with momentum shifting from valuation pressure to steady recovery. Following the Union Budget's direct tax (I-T slab) simplification in February, momentum improved, said Pankaj Singh, smallcase Manager and Founder & Principal Researcher – "The recovery has carried into the current quarter, with the index up another 2%, supported by a 2% rebound in valuations," Singh said. Now, with the favourable monsoon and positive earnings trend — the question remains if FMCG stocks, once the darling of Dalal Street investors, can make their comeback with the GST rationalisation booster in place? Rural demand, after a sharp deceleration during 2022 to mid-2024 amid several headwinds like stagnant wages, high inflation and the prolonged impact of the Covid-19 pandemic, has made a strong comeback in the last 12 months. The last 12 months saw a healthy rural recovery, although on a weak base. With macro parameters constantly improving, we expect that rural markets will sustain healthy growth trends in the coming quarters," said Motilal Oswal Financial Services. Urban consumption following a sharp hit is also showing signs of revival, in a boost for FMCG companies. With easing inflation, falling interest rates and income tax savings, MOSL believes that urban demand pressure is bottoming out and recovery signs will be visible more clearly in the second half of the fiscal 2025-26 (FY26). As a result, agri-linked upstream companies have reported stronger growth and margin expansion in Q1, benefiting from higher rural consumption. After delivering 6% and 5% growth in FY24 and FY25, respectively, the revenue of consumer staples in MOSL's coverage saw a pickup in growth in first quarter of FY26, to 10%, mainly due to improved sales volumes. Most companies saw slightly better volume growth during this quarter, and their management teams sounded optimistic, said the brokerage. "That said, margins remain under pressure across the sector because of sharp increases in the cost of key raw materials like palm oil and copra. To deal with this, many companies have raised product prices. If raw material prices stay stable, we expect margin pressure to ease starting from the third quarter of FY26," it added. Ever since the announcement of GST reforms, the FMCG stocks have been rejoicing. But despite this, analysts are unconvinced of the index surging to its past glory. G Chokkalingam, Founder, Equionomics Research, said that a revival in the FMCG sector is on cards — but not in a big way. The Budget has already given a boost through direct tax cuts, and now, the PM has pushed for increased internet access — a bold and courageous move, said Chokkalingam. Both direct and indirect tax reforms are major positives for the middle class, which will help FMCG, according to him. But will it return to its golden days? He is doubtful. "There's a structural shift happening with the rise of digital and new-age players. They're eating into the fast-growth territory. Regional players are also emerging, aided by the low cost of digital marketing. Earlier, a 30-second ad would cost ₹ 30–40 lakhs. Today, a few thousand rupees can get you visibility on social media. So, smaller and regional players are also gaining ground. Yes, the overall trend is positive, and the sector will improve — but a full-fledged revival to past glory is uncertain," he added. Meanwhile, analysts believe the sector makes for a compelling bet in the medium term. "FMCG is well-positioned to benefit from supportive policies and a strong macro backdrop. The PM's hint at GST rationalisation has raised hopes of a demand revival, especially in packaged foods and staples, by improving affordability and lowering compliance costs. Earlier tax relief and lower interest rates have already boosted disposable incomes. A favourable monsoon is expected to lift farm incomes, further supporting rural demand, which is outpacing urban markets. Meanwhile, input costs are stabilising after FY25 pressures, offering scope for better margins," said Harshal Dasani, Business Head at INVasset PMS. While final clarity on GST changes is awaited, the alignment of tax reforms, rural demand and monsoon-led consumption makes FMCG a compelling medium-term allocation," said Dasani. Brokerage MOSL believes that a consumption revival, while also positive for discretionary companies, is more likely to impact FCMG companies. "FMCG companies have been impacted the most, and the ask rate has gone down significantly; therefore, the sensitivity looks superior for FMCG companies," it opined. Dasani said that for investors, the prudent strategy is to anchor portfolios in established FMCG names while allocating selectively to new-age disruptors for long-term growth optionality. Singh, too, opined that traditional FMCG stocks remain the stability anchors. 'Policy reforms plus a good monsoon could make mass-market and agri-linked FMCG names the clear winners,' he added. Nuvama Institutional Equities likes HUL, Britannia, Bikaji and Nestle following Q1 results announcement. Meanwhile, from the consumer discretionary space, it is bullish on United Breweries and Asian Paints. It also likes Dabur as it sees the blue-chip stock recovering on a soft base. HUL, GCPL, and Marico are MOSL's top picks in the consumer staples space. "The next 12-24 months will be an interesting period for consumption, but we need to be more mindful of selecting the right portfolio," MOSL advised. Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
Economic Times
15 minutes ago
- Economic Times
Focus on core business and ignore the rest: 5 small-caps from different sectors with upside potential of up to 48%
While caveats normally come at the end of a story, sometimes it is better to state them up front. Why? Because it reduces the anxiety quotient and increases the probability of you making the right decision amidst too bullish or too bearish headlines. The caveat: The stocks on our list today may or may not perform in the short term. They may also face pressure if there is any development that hits the Indian or global markets. But as they say, FONT SIZE SAVE PRINT COMMENT
