Indian Oil Corporation is expected to report better revenues and margins sequentially in Q4 FY23 aided by cheap Russian crude and better utilisation levels at its refineries.

However, its performance on an annual basis would still be in red due to high international prices and huge under recoveries due to a freeze on retail prices of petrol and diesel since April 6, 2022.

Analysts pointed out that IOC refineries clocked their highest-ever throughput of over 72.4 metric tonnes (MT), compared to 67.67 MT last year. Besides, its liquid pipelines throughput jumped significantly from about 83.25 MT in FY22 to the highest-ever 94.7 MT during FY23.

During the entire FY23, IOC reported a petroleum products (POL) sales growth of about 14 per cent YoY. Its POL market share increased from 40.8 per cent in FY22 to 42.9 per cent in FY23. The petrol sales have grown by over 19.2 per cent, diesel sales by nearly 19.3 per cent, and LPG sales by about 1 per cent.

With global crude oil prices gradually cooling down during January-March 2023 and Indian refiners continuing to purchase cheap Russian crude oil has helped oil marketing companies (OMCs) pare some of their losses due to under recoveries.

Also read: What’s wrong with importing Russian oil?

Better Macros for OMCs

ICICI Securities in a March 3 report said that the past 8 weeks have seen stronger macros for OMCs, with the combination of double-digit GRMs (albeit at lower levels vs Q2-Q3 FY23 highs) and marketing margins getting into positive territory in a meaningful way.

“The calculated gross refinery margins (GRMs) for OMCs (excluding any inventory impact/windfall tax) have remained strong at $11-13 per barrel for Q4 FY23 (till February 24, 2023), down $1-2 a barrel QoQ due to softer diesel and ATF spreads,” it added.

The brokerage further said that due to the $14.4 per barrel decline in applicable diesel prices and $5.6 a barrel increase in petrol prices, marketing margins for petrol have moderated QoQ to ₹6.8 per litre (average for Q4 FY23-TD), while diesel losses have narrowed to ₹1.2 a litre for Q4-TD.