India's top three state-owned oil firms, the Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) posted the highest ever loss of Rs 21,000 crore in the first half of FY23. Despite a government grant of Rs 22,000 crore, the public sector firms were only able to pare losses, while fuel prices remained stagnant. Now all three are still looking at weak earnings, although global oil prices have dipped.
But as global oil prices cool down, the big three oil producers of India will gradually return to profitability in FY24. Even as costs of raw materials went up, the firms weren't able to raise prices, while the common man kept waiting for a price reduction on lower oil prices. Even as discounted oil form Russia kept flowing in, the depreciation of the Rupee against the US dollar bogged down profits.
But there still remains a risk that any escalation in the Russia-Ukraine war as well as an uptick in China's consumption, could again increase crude prices, affecting the profits of oil refiners.
Final ratings of the state-owned firms are likely to remain unchanged thanks to the possibility of extraordinary government support.
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