OMC: HSD and MS Drove the Oil Sales in May12

Total oil sales for May12 have improved by 24% MoM. However, the consumption continued to show negative momentum for the sixth straight month (down 2% YoY) when compared to the same period last year    Oil consumption in 11MFY12 has concluded on negative note as sales showed a decline of 1% YoY to 17.8mn tons    Thanks to marked improvement in off takes of HSD (up 48%) and continuous improvement in MS sales (up 25%), total sales of major products have clocked in at 1.8mn tons compared to 1.44mn tons in Apr12    Slowdown in 11MFY12 sales is attributable to 1) rising circular debt which led the oil marketing companies to shy away from FO sales, 2) higher product prices and 3) halt in supplies to NATO forces    With relative immunity towards cash strapping circular debt, greater share of high margins and cash stable products (Asphalt) and improving share of fixed margins products (HSD and MS), APL stands as our top pick in the oil marketing chain

OMC: HSD and MS Drove the Oil Sales in May12