Oil India's Q2 profit forecast misses the mark due to lower prices and muted demand

State-run explorer Oil India reported a smaller-than-expected second-quarter profit on Tuesday, weighed down by lower crude prices and tepid fuel demand.

The company's profit grew six-fold in three months to 18,34 billion rupees ($218 million), but it was below analysts' expectations, which were 18.72 billion rupees. Data compiled by LSEG.

Oil India's earnings are exclusive of profits from joint ventures or operations outside the country.

India's Oil Ministry data showed that domestic fuel demand dropped during the third quarter as the above-average rain reduced the use of diesel powered irrigation and farm equipment. The sales of automobiles also fell, which is another major driver for diesel demand.

The explorers' bottom line was further impacted by the global drop in crude oil prices of nearly 17% over the past three months.

Oil India, which has exploration and production assets primarily in the northeastern region of the country reported that its revenues from operations dropped 6.6%, to 55.18 billion Rupees. This was below estimates.

Analysts expected an average revenue of 57.73 Billion Rupees.

India scrapped its windfall tax on petroleum crude that it had levied in 2022, which helped to boost the company's quarterly profits by 52%.

As global oil prices slowed down in comparison with 2022, the government decided to scrap the windfall tax.

Peer ONGC will report its quarterly results in the next few days. ($1 = 84.0870 Indian rupees) (Reporting by Manvi Pant in Bengaluru; Editing by Abinaya Vijayaraghavan)

(source: Reuters)