Moody’s Gives Stable Outlook for Indian Oil and Bharat Petroleum
Moody’s Ratings has affirmed a stable outlook for two major state-owned oil companies in India: Indian Oil Corporation Ltd (IOCL) and Bharat Petroleum Corporation Limited (BPCL). This decision was announced in two separate statements on Thursday.
Indian Oil Corporation Ltd (IOCL)
IOCL is India’s largest refining and marketing company. Moody’s expects IOCL’s credit metrics to remain strong over the next 2-3 years, even with a moderation in earnings and high capital spending. Sweta Patodia, a Moody’s Ratings Assistant Vice President and Analyst, stated, “IOCL’s strong balance sheet, combined with its status as India’s largest refining and marketing company, support a baa3 BCA (Baseline Credit Assessment).”
IOCL operates 11 refineries with a combined capacity of 1.6 million barrels per day, making it the largest downstream oil company in India with a 31% share of the domestic refining capacity. The company also has an extensive pipeline and retail network, petrochemical operations, and a gas distribution business. As of June 30, 2024, IOCL was 51.5% owned by the Indian government.
Bharat Petroleum Corporation Limited (BPCL)
BPCL is the third-largest oil refining company in India, with a combined capacity of 709,000 barrels per day and a 14% share of the domestic refining capacity. The company operates three refineries located in Mumbai, Kochi, and Bina. Moody’s expects BPCL’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.
Sweta Patodia also mentioned, “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.” As of June 30, 2024, BPCL was 52.98% owned by the Indian government.
Doubts Revealed
Moody’s -: Moody’s is a company that gives ratings to other companies to show how good or bad they are at managing money and paying back loans.
Stable Outlook -: A stable outlook means that Moody’s thinks the companies will continue to do well and not face big problems in the near future.
Indian Oil Corporation Ltd (IOCL) -: IOCL is a big company in India that makes and sells oil and gas products. It is the largest in the country for refining and marketing oil.
Bharat Petroleum Corporation Limited (BPCL) -: BPCL is another big company in India that refines and sells oil and gas products. It is the third-largest in the country for refining oil.
Credit Metrics -: Credit metrics are numbers that show how well a company can pay back its loans and manage its money.
Capital Spending -: Capital spending is the money a company uses to buy things like buildings, machines, and equipment to help it grow and do business better.
Majority-owned by the Indian government -: This means that the Indian government owns more than half of these companies, so it has a lot of control over them.
