Fuel rate cut to not hit OMC margins

THE RECENT CUT in prices of petrol and diesel is unlikely to impact the marketing margins of the company, said Shrikant Madhav Vaidya, chairman of Indian Oil

- ARUNIMA BHARADWAJ

"We shouldn't expect much impact on the bottom lines," he told reporters. He added that the company will be able to take any call on further price cuts after witnessing how the global crude prices behave.

Moreover, analysts also believe that the reduction in auto fuel prices is unlikely to significantly impact the profitability of the OMCs but would have only a marginal effect.

"The cut is within the comfort zone (petrol cut was lower than our greater ₹3 per litre expectation), and would not impact our FY24E earnings for IOCL, BPCL and HPCL," Emkay Global Financial Services said in its report. The firm believes that the consequent margin impact will only be for a brief period of nearly two months.

ICICI Securities also estimates that the retail fuel margins of the OMCs will remain relatively stable at ₹4 per litre for petrol and ₹2 per litre for diesel.