Sustained marketing margins, recovering demand aid profitability of OMCs

The agency expects above long-term average MMs from FY22, which should aid GRMs in the short term

The sustained strength of marketing margins (MM) and recovering demand for petroleum products is supporting the profitability of India's oil marketing companies (OMC) against weak gross refining margins (GRM). It is lowering downside risks for their credit metrics, Fitch Ratings said.
 

Petroleum product sales for Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) surged by 22%-23% in the third quarter (Q3FY21) from the previous quarter. The recovery of domestic transportation fuel demand to near normal levels, barring aircraft fuel, and MMs on auto fuel at above pre-pandemic levels aided the sales.
 

However, reported