Even after the government hiked petrol, diesel prices by Rs 3 per litre last week, Indian fuel retailers continue to bleed due to under-recoveries and need another Rs 25 per litre price hike only to break even on marketing margins, according to analysts who estimate a daily loss run rate of Rs 1,380 crore for oil marketing companies (OMCs).
Calculations done by Nomura analyst Bineet Banka show that OMCs are currently losing Rs 25/litre on petrol and diesel on a blended basis and that their daily loss run rate is now at a staggering Rs 1,380 crore if one were to include LPG as well. The brokerage firm estimates that at the current run rate of integrated losses, Indian Oil Corporation (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) would completely exhaust their balance sheet equity within 10, 4, and 2 years, respectively, if losses continue unchecked.
