Oil Companies in India to Post Dip in Profits in FY25

SEATTLE (Oil Monster): The profits of oil companies in India are likely to record decline in FY25, primarily due to anticipated drop in gross refining margins (GRMs), according to latest report published by CareEdge Ratings.

According to the report, the GRM of oil companies in the country had averaged at $16-18 per barrel in FY23. In FY24, the refining margins moderated to average at $10-12 per barrel. CareEdge Ratings predicts the GRMs of oil companies to drop further to $6-8 per barrel in FY25.

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The moderation in margins was mainly on account of narrowing discount on imported Russian crude coupled with a reduction in production cracks. However, significantly higher marketing margins helped these companies to report multi-fold jump in operating profits during FY24, when compared with FY23. In accordance with the data provided by the Ministry of Petroleum and Natural Gas, the combined profit of oil marketing companies surged higher by more than 25 times to INR 86,000 crore in FY24, in comparison with the previous fiscal.

The recent cut in retail price of petrol and diesel by INR 2 per litre may squeeze the marketing margin for oil companies during this fiscal.