Shares of state-owned oil marketing companies (OMCs) have bucked the weakening trend among benchmark indices on talk of another fuel price hike.
While indices lost close to five per cent value over the last seven trading sessions, stocks of oil companies have been on boil, gaining eight per cent during the period.
Consider this : Hindustan Petroleum Corporation Ltd (HPCL) has gained the most as its shares have appreciated around 8.5 per cent while those of Bharat Petroleum Corporation Ltd (BPCL), gained 7.8 per cent on the Bombay Stock Exchange. Interestingly, this period saw the BSE sensitive index, or Sensex, losing close to 1,000 points from its recent intra-day peak of 18,523 on February 22.
Moreover, in terms of year-to-date returns too, the oil marketing giants have substantially outperformed the benchmark indices. So, stocks of BPCL are up 38 per cent while HPCL gave returns of 23 per cent, against around 14 per cent by the Sensex.
| FUELLING UP Share price movement of oil marketing companies (Rs) | ||||
| Company | 21-Feb | 1-Mar | Change (%) | YTD return (%) |
| HPCL | 286.35 | 310.55 | 8.45 | 23.38 |
| BPCL | 613.50 | 661.35 | 7.79 | 38.02 |
| IOC | 272.25 | 278.80 | 2.40 | 9.87 |
| Sensex | 18,428.61 | 17,583.97 | -4.6 | 13.77 |
| Net profit of OMCs in the December quarter (Rs crore) | |||
| Company | 2010 | 2011 | Change (%) |
| HPCL | 211.03 | 2725.18 | 1191.37 |
| BPCL | 187.38 | 3139.60 | 1575.52 |
| IOC | 1634.76 | 2488.44 | 52.22 |
| Source : Bombay Stock Exchange | |||
“OMC stocks have gained mainly on the back of speculation that fuel prices would be hiked,” says Deepak Pareek, oil & gas analyst at Prabhudas Lilladher.
Earlier this week, reports suggested prices of petrol as well as diesel were likely to be hiked by Rs 2-4 per litre once the ongoing state elections ended. It was in June, 2010 that the government had freed prices of petrol from its control.
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According to industry officials, government-owned oil companies are losing about Rs 4 per litre on sales petrol while on diesel the loss stands higher at Rs 12.77 per litre. Besides, OMCs lose Rs 30.21 on the sale of every litre of kerosene while the sale of a 14.2-kg domestic LPG cylinder sets them back by Rs 378. Industry estimates say BPCL, HPCL and Indian Oil Corporation (IOC) are losing over Rs 410 crore per day on sale of diesel, domestic LPG and kerosene.
Interestingly, after notching up huge collective losses of around Rs 23,500 crore during the first two quarters of the current financial year, December quarter brought relief to OMCs as they turned profitable against industry experts’ expectations of yet another loss-making quarter.
For instance, IOC - the largest state-owned oil firm in the country on sales and market capitalisation - reported profit after tax (PAT) of Rs 2,488 crore, up 52 per cent against the corresponding period previous year figure of Rs 1,635 crore. BPCL and HPCL came up with robust growth in profitability at 16 times and 12 times, respectively.