New Delhi, November 21 (IANS). The profit of oil marketing companies is expected to increase by about 50 percent this financial year to $ 18-20 per barrel, which was $ 12 per barrel in the last financial year. This information was given in a report released on Friday.
The report released by Crisil Ratings said that the increase in operating profit was due to strong margins, stable retail fuel prices and positive dynamics of crude oil.
The increase in marketing margins on petrol, diesel and other petroleum products is expected to offset the decline in refining margins. The demand for fossil fuels is increasing due to the shift towards clean energy by big countries of the world.
The report said that good cash flow will continue to support OMC’s capital expenditure and will also strengthen its credit profile.
Analysts believe that crude oil prices are expected to be $ 65-67 per barrel in this financial year. At the same time, gross refining margin can be 4-6 dollars per barrel.
“With no change in fuel retail prices, marketing margins will increase to $14 per barrel (Rs 8 per litre), which is expected to take gross margins by 50 per cent to $18-20 per barrel,” said Anuj Sethi, senior director, CRISIL Ratings.
According to the report, due to good margins, cash receipts in this financial year are expected to be Rs 75,000 to Rs 80,000 crore, which was Rs 55,000 crore in the last financial year.
The report said that this will strengthen OMC’s capital expenditure plan of Rs 90,000 crore. Most of this expansion will be brownfield. OMC’s debt-to-EBITDA may increase to 2.2 times this financial year, which was 3.6 times last financial year.
–IANS
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