Retail prices of auto-fuels may rise by one other Rs 3/litre as state-run oil marketing firms (OMCs) will possible need to enhance their marketing margins amid rising world crude and product prices, analysts really feel.
The marketing margin of Rs 1.56 per litre within the ongoing quarter until date is the bottom encountered by OMCs within the final 9 quarters and with current snowstorms impacting refinery operations within the US, the margin will fall further if retail prices are unchanged.
On Friday, retail petrol worth in Delhi was at an all-time excessive of Rs 90.93/litre, rising by about 9% within the final two months. “More hikes are needed to prevent margin from plunging in Mar’21 and being over Rs 2.5/litre from Apr’21,” ICICI Securities stated in a current be aware, including that “retail price hikes of Rs 2.9/litre is required for net margin to rise to over Rs 2.5/litre at latest international prices”.
The worth of Indian basket of crude is at the moment at $63.79/barrel, up from $50/barrel in mid-December, supported by world demand recovery and voluntary manufacturing cuts from main oil exporting nations. “If crude rallies further and settles higher and excise duties are not cut, we see pressure on marketing margins in FY22E which along with higher interest expenses could hurt OMC earnings,” analysts at Jefferies warned. However, the brokerage agency stated that OMCs may get a reduction from rising world prices within the type of larger stock features, ranging between $2 and $8 per barrel in 4QFY21.
The Centre’s tax (primary excise, surcharge, agri-infra cess and highway/infra cess) is at the moment Rs 31.83/litre for diesel and Rs 32.98/litre for petrol. In March and May, 2020, surcharge and cess on auto fuels have been cumulatively elevated by Rs 13/litre on petrol and Rs 16/litre on diesel. Analysts at Bank of America not too long ago stated that the Centre may reduce auto gasoline taxes by Rs 5/litre to ease stress on shoppers as common worth of worldwide crude oil is seen to be round $60 per barrel in FY22.