OMCs: Rising demand, profitability in fuel retailing to drive earnings

Higher refining margins, rising demand, new capacities and improving profitability in fuel retailing to drive earnings

After lagging the leading indices in recent months, the shares of the three government-owned oil marketing companies or OMCs — Bharat Petroleum (BPC), Hindustan Petroleum (HPC) and Indian Oil (IOC) have started looking up. These rose by two to four per cent on Tuesday.
 
Abhijeet Bora, analyst at brokerage Sharekhan, says this is due to improvement in the earnings outlook for their marketing business, given strong petroleum consumption, stabilisation of marketing margins on automobile fuels and likely inventory gains, given higher oil/petro product prices in the March quarter.
 
Refinery and marketing margins had seen some softness from October.