Oil & gas shares in demand; ONGC hits 5-year high; HPCL soars 6%, IOCL 4%

In Q2, HPCL logged a consolidated net of Rs 5,827 crore, compared to a loss of Rs 2,476 crore in year ago quarter. Revenue, however, dipped 9.7 per cent YoY to Rs 1.02 lakh crore.

Shares of state-owned oil & gas companies were in focus, with oil marketing companies (OMCs) Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOCL) and Bharat Petroleum Corporation (BPCL) rallying up to 6 per cent in an otherwise weak market in Tuesday’s intra-day trade after the companies reported better-than-expected September quarter (Q2FY24) results.

Among shares of upstream companies, Oil and Natural Gas Corporation (ONGC) hit a five-year high ahead of its Q2 results on Friday, November 10, while Oil India was up 2 per cent at Rs 317 on the BSE. At 12:25 PM; S&P BSE Oil & Gas index was up 1.4 per cent, as compared to 0.4 per cent decline in the S&P BSE Sensex.

Among individual stocks, HPCL soared 6 per cent to Rs 277.25 on back of near five-fold jump in average trading volumes after the company reported returning to profitability in Q2FY24 after a boost in marketing margin improved earnings.

In Q2FY24, HPCL logged a consolidated net profit of Rs 5,827 crore, compared to a loss of Rs 2,476 crore in year ago quarter. Revenue, however, dipped 9.7 per cent year-on-year (YoY) to Rs 1.02 lakh crore.

Average GRMs (gross of export duty) for Q2FY24 were $ 13.33 per barrel, against $ 8.41 per barrel during the corresponding period of previous year, HPCL said in an exchange filing.

IOCL hit a 52-week high of Rs 103.20, up 4 per cent in intra-day trade today. The stock was quoting higher for eight straight trading day and has rallied 20 per cent during the period.

IOCL reported a net profit of Rs 13,713 crore in Q2FY24, against a loss of Rs 910 crore in Q2FY23. The company's revenue from operations dwindled by 11.9 per cent to Rs 2.05 lakh crore compared to Rs 2.33 trillion in Q2FY23. A strong average GRM – the revenue refiners accrue from transforming each barrel of crude oil into refined fuel products – helped IOCL to performed during the quarter.

Analysts had projected weak results for OMCs due to a substantial fall in marketing gains of blended margins, which fell to Rs 4.7 per litre of fuel sold in the week ending 24 September, according to a note by Nomura. Similarly, Prabhudas Lilladher had pegged blended marketing margins for IOCL in Q2 at Rs 4.4 per litre, down from Rs 8.7 per litre.

Shares of BPCL were up 2 per cent at Rs 372.55 in intra-day trade.

Meanwhile, shares of ONGC were up 2 per cent at Rs 197.55, its highest level since February 2018. The average trading volumes at the counter nearly doubled with combined around 10 million shares changing hands on the NSE and BSE.

Due to the lagged impact of windfall tax, Kotak Securities expect ONGC’s net oil realization to increase 2 per cent quarter-on-quarter (QoQ) to $55/bbl. With higher QoQ sales volumes, the brokerage firm expects ONGC’s EBITDA to increase 4 per cent QoQ. Oil India’s Q2 numbers will look even stronger owing to a low base (NRL shutdown), with the EBITDA rising 13 per cent QoQ.

The board of directors of Oil India is scheduled to meet on Wednesday, November 8 to consider and approve Q2FY24 results and to declare interim dividend for the FY23-24, if any.