Crude prices and GRM: Average Brent price fell 19.8/19.1% YoY/QoQ to USD 50.6/bbl in 4Q. Sharp correction in gasoil and jet kero cracks to USD 10.8/bbl and USD 8.5/bbl compared to USD 14.6/bbl and 14.8/bbl in 3Q has resulted in lower GRMs for Indian refiners.
OMCs: We expect core GRM of USD 2.8/0.8/3.5bbl for IOCL/HPCL/BPCL, down from USD 2.9/1.5/2.2. Reported GRMs will be adversely impacted by inventory/forex losses as crude oil prices fell sharply in March. IOCL/HPCL/BPCL will report crude and product inventory losses of Rs 102.2/40.5/36.9bn. We expect OMCs to report negative EBITDA of Rs 53.1/24.1/12.8bn. Post the countrywide lockdown, transport fuel sales have declined by >80%. Volumes are expected to remain weak in 1QFY21E as well.
Upstream players: We expect a sharp 24-28% YoY decline in EBITDA for ONGC and OIL respectively, led by lower (1) Crude realizations at USD 51/bbl, down 18.3/15.3% YoY/QoQ, (2) Prices of VAPs. We do not expect oil production to be impacted in FY21. Lower refinery utilization will reduce volume of imported oil. As the plunge in demand will keep oil prices subdued, we reduce our oil price realization to USD 36/41/bbl in FY21/22E.
RIL: We expect RIL’s EBITDA to decrease by 11.9% QoQ to Rs 113.45bn owing to (1) 13% fall in GRM to USD 8.0/bbl vs. USD 9.2 in 3Q and (2) Decline in petchem margins. We expect GRM of USD 7.0/9.0/bbl in FY21/22E and Petchem EBITDA of USD 72.8/80.6/ton of production.
CGD: We expect IGL/MGL to report 11.3/10.4% QoQ decline in EBITDA, reflecting lower volumes, partly offset by higher per unit gross margins post the reduction in PMT gas prices. We expect PAT growth of 45.7% YoY for GGL owing to volume growth of 39% YoY to 8.9mmscmd. We expect EBITDA per unit margin of Rs 6.3/ 9.2/4.4/scm for IGL/MGL/GGL.
PLNG/GAIL/GSPL: We expect GAIL to report 11.0% QoQ lower EBITDA owing to fall in profitability in the petchem and LPG segments. GSPL’s volume is expected to be 37.3 mmscmd, up 15.1% YoY owing to robust demand from CGD companies. We expect PLNG’s EBITDA to fall by 15.6% QoQ, despite the yearly 5% tariff hike, given 9.2% QoQ fall in vols to 212 tbtu.
