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Auto fuel net marketing margin may fall to minus Rs 0.1/litre at latest prices. FY21E net margin would still be up 26% YoY at Rs 2.8/litre if no hikes are made.
Net margins are perhaps being allowed to be low in Q4 as FY21E margins and oil marketing companies' FY21E earning per share would still be up sharply YoY.
However, net margin would have to rise from April 2021 to Rs 2-2.5/litre, which calls for either retail price hikes and/or excise duty cut that would not be fully passed on.
Press reports suggest Government of India is considering an excise duty cut.
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