Shares of oil marketing companies such as BPCL, HPCL and Indian Oil, along with ONGC and GAIL India have rallied by up to 8% in afternoon deals after the Indian Rupee (INR) hits one month high against the US Dollar (USD) today.
State-owned downstream oil marketing firms, BPCL and IOC are most benefited by the strong INR to USD rates as their revenues are linked to USD, their EBITDA margins are thin (3%-5%) and they are highly leveraged.
The oil marketing companies import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.
The appreciation of rupee will reduce their borrowings; requiring less working capital to fund the higher cost of crude oil and under-recoveries.
Among the individual stocks, BPCL has rallied 8% at Rs 341, followed by ONGC (6% at Rs 299), HPCL and GAIL (4% each at Rs 207 and Rs 330 respectively) and Indian Oil (3% at Rs 237) on the BSE.
State-owned downstream oil marketing firms, BPCL and IOC are most benefited by the strong INR to USD rates as their revenues are linked to USD, their EBITDA margins are thin (3%-5%) and they are highly leveraged.
The oil marketing companies import about 70-75% of their crude oil needs and rely heavily on foreign currency borrowings, which largely remain unhedged.
The appreciation of rupee will reduce their borrowings; requiring less working capital to fund the higher cost of crude oil and under-recoveries.
Among the individual stocks, BPCL has rallied 8% at Rs 341, followed by ONGC (6% at Rs 299), HPCL and GAIL (4% each at Rs 207 and Rs 330 respectively) and Indian Oil (3% at Rs 237) on the BSE.
