Fitch says HPCL refining margins to fall in current fiscal

Fitch Ratings on Monday said it expects Hindustan Petroleum Corp Ltd's (HPCL) refining margins to fall by one-third during the current fiscal due to volatility in crude prices leading to inventory losses.

Fitch affirmed HPCL's rating 'BBB-' with stable outlook, in line with the credit profile of its largest shareholder Oil and Natural Gas Corp Ltd (ONGC).

"The agency assesses HPCL's standalone credit profile at 'bb' to reflect its position as one of India's biggest oil-marketing companies, average-but-improving complexity of its refining assets and moderate financial profile," Fitch said in a statement.

HPCL, it said, is highly strategic to ONGC's vertical integration strategy, and its refining capacity, along with its large fuel retail network, increases ONGC's downstream integration, making the company India's third-largest oil-refining and fuel-marketing company.

The investment in HPCL is also ONGC's largest. ONGC in January 2018 paid Rs 36,915 crore to acquire 51 per cent stake in