Rapid Recovery: Oil Companies' Revenue Growth Optimism Moody's.
Key Sentence:
- Indian Oil Corporation, Bharat Petroleum Corporation Ltd., Hindustan Petroleum Corporation Ltd.
- Moody is optimistic that oil companies' revenues, including oil, will grow in the next 12 to 18 months.
- A recovery in economic activity and an increase in fuel demand will lead to a faster recovery in the oil company.
Rising demand for fuel and stability in revenue from marketing operations will improve refining margins. However, an improvement in order will boost Asian refining margins. Demand for petroleum products has been steadily declining since April-May 2020 due to the lockdown imposed by Covid-19 last year. As a result, refineries' revenue declined sharply during the financial year ended March 31, 2021.
Covid's second wave also had an impact on demand for petroleum products due to partial sanctions. However, the latter has seen a rapid recovery. IOC, BPCL has a 90 percent stake in the fuel retailing network. All three companies are government acquired.
Large scale fuel retailing network and strong position in the market will give Indian companies a steady income in the marketing business. Moody's said strong demand for petroleum products would result in higher investment by three refiners. Attempts have been made to accelerate investment spending to aid economic growth.
Dividends in 3 companies at historical levels
Dividends in these three companies will remain at historic levels with the guidance of the Department of Investment and Public Asset Management. Indian companies have high profitability. At the same time, its scale and credit metrics are on par with other companies. Massive marketing, as well as middle-class activities, provide diversification in revenue, which will overcome the challenges of the refining business. As well as increase the profitability of Indian refining and marketing companies.
Source from Divyabhashkar