Jul 28, 2000|
We all also sell fuel…
In the not to distant future we should see a visible difference in the appearance and facilities available at our petro-outlets. Currently, a few outlets in the metros are providing a slew of services from banking to net surfing to convenience stores. And one must not forget they also sell fuel. Reminding us of the famous TISCO ad campaign.
Is this indicative of the things to come and can we expect such multi-service petro-outlets across the length and breath of the country? The swanky multi-service outlets are not the outcome of some shift in architectural aesthetics but more as a defense against the forces of competition. The retail customer can look forward to more such pampering due to the following reasons.
India is expected to have an aggregate over-supply of petro-products. Consequently, refining margins will come under pressure. Those companies that have a marketing set up will have a buffer in the form of marketing margins. Thus gross margins will not be fully exposed to the refining cycle.
Subject to the above, the business model of integrated energy companies will be less volatile over shifts in the business cycle as compared to pure refining companies.
The integrated companies currently supply fuel to two market segments industrial and retail consumers. The industrial segment is a bulk consumer and with excess capacity in the refining sector the bargaining power of this consumer segment will increase. Thus the marketing margins to this segment will be the first to be hit.
The companies are also identifying alternative revenue streams to be generated from their retail assets. These assets have high replacement value and earnings from them will have to increase to justify retailing of fuel. Hence, the shift towards multi-service petro-outlets. Further, if these streams end up contributing a sizeable portion to the revenue the cyclicality of the business also reduces.
Post deregulation the marketing margins should witness a sizeable increase as worldwide the marketing margins are significantly more than those of the Indian counterparts.
With the winds of change in the rear view the retail customer has everything to look forward to. The increased competition will offer a wide spectrum of services on a platter but please remember to also top up your fuel tank.
More Views on News
Mar 27, 2017
GAIL (India) Ltd has announced results for the quarter ended December 2016. reported 9.4% year on year (YoY) decline in sales, while bottom-line grew 45.4% YoY.
Mar 17, 2017
ONGC has announced results for the quarter ended December 2016. The company has reported 9.2 % year on year (YoY) growth in sales, while bottom-line grew 197% YoY.
Jan 24, 2017
Oil India Limited announced results for the quarter ended September 2016. The company has reported an 6.5% and 7.8% Year on Year (YoY) decline in sales and net profit respectively during the quarter.
Dec 3, 2016
GAIL (India) Ltd has announced results for the quarter ended September 2016. The company has reported 16 % year on year (YoY) decline in sales, while bottom-line grew 180% YoY.
Nov 3, 2016
ONGC has announced results for the quarter ended September 2016. The company has reported 10.3 % year on year (YoY) decline in sales, while bottom-line grew 6.3% YoY.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407