The revenue for Oil and Gas companies is estimated to decline in the first quarter (April-June 2021) owing to the second wave of COVID-19 led state-wise lockdowns impacting demand.
The lower marketing sales volumes for Oil Marketing Companies (OMCs) and lower gas volumes for City Gas Distribution (CGD) companies is likely to be offset by an improvement in realisation for upstream companies during the quarter.
“In turn, we expect Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for oil and gas companies under our coverage to decline by around 2 per cent quarter-on-quarter in first quarter 2021-22,” equity reseach firm HDFC Securities said in a note.
The Gross Refining Margin (GRM) for Indian Oil (IOC) is set to decline to $1.4 per barrel in the June quarter, from $2.5 per barrel recorded in the fourth quarter last financial year, owing to negative cracks from naphtha, Fuel Oil and LPG offsetting increase in spreads of gasoline, ATF and gasoil.
The second wave of COVID-19 has also impacted demand leading to a drop in refining throughput and planned shutdown undertaken by HPCL, apart from marketing volumes falling during the quarter.
The average Brent price is up 13 per cent quarter-on-quarter to $68.4 per barrel in the first quarter and marketing margins are up around 10 per cent quarter-on-quarter owing to improvement in margins for diesel and petrol.