Moody's affirms stable outlook for BPCL, IOCL
Jul 18, 2024
New Delhi [India], July 18 : Moody's Ratings on Thursday affirmed a stable outlook for state-owned oil companies Indian Oil Corporation Ltd (IOCL) and Bharat Petroleum Corporation Limited (BPCL), the rating agency said in two separate statements.
The upgrade reflects the expectation that the company's credit metrics will remain strong over the next 2-3 years despite a moderation in earnings and high capital spending, said Sweta Patodia, a Moody's Ratings Assistant Vice President and Analyst.
"IOCL's strong balance sheet, combined with its status as India's largest refining and marketing company, support a baa3 BCA (Baseline Credit Assessment)," said Patodia.
Moody's expects crude oil prices to remain at or near current levels over the next few months. As such, marketing margins are likely to remain healthy even as they normalize from the high levels in 2023.
The stable outlook on IOCL's rating reflects the stable outlook on the Government of India, Moody's said.
Indian Oil Corporation Ltd (IOCL) is a leading downstream company specializing in oil refining and marketing and distribution of petroleum products, petrochemicals and natural gas. The company is listed on Indian stock exchanges and was 51.5 per cent owned by the Indian government as of 30 June 2024.
Through its 11 refineries, which have a combined capacity of 1.6 million barrels (bbl)/day, IOCL is the largest downstream oil company in India with a share of around 31 per cent of the domestic refining capacity. It also has an extensive pipeline and retail network, petrochemical operations and a gas distribution business.
For BPCL, Moody's said it expects the company's operating performance to remain strong amid continued growth in the consumption of petroleum products in India and a healthy refining and marketing margin environment.
"The stable outlook reflects our view that BPCL's credit metrics will remain appropriately positioned despite the company's large capital spending plans over the next five years," said Patodia.
Bharat Petroleum Corporation Limited (BPCL) is a downstream company specializing in oil refining and retail of petroleum products.
The company is listed on the Indian stock exchanges and was 52.98 per cent owned by the Indian government as of 30 June 2024. BPCL has a combined capacity of 709,000 bbl/day and is the third-largest oil refining company in India, with a share of around 14 per cent of the domestic refining capacity. It has three refineries located at Mumbai, Kochi and Bina.
