Crude pain for refinery counters

The bullish trend on the bourses has skipped oil marketing companies

With the domestic oil companies absorbing the surge in crude oil prices, the stocks of these companies have heavily underperformed the Sensex and the Nifty in the past 30 days.

While the Indian Oil Corporation (IOC) scrip gained 7 per cent, those of Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) edged up by only 3-4 per cent.

The stock of the pure marketing company, IBP, lost 2 per cent during last one month. In the same period, the BSE Sensex and the NSE Nifty added 10 per cent.

The bullish undertone in the market has not propped up the stock price of oil marketing companies as the government declined to raise retail prices of petrol, diesel, kerosene and cooking gas even as international crude price hit a high of $52 a barrel.

"Integrated refining and marketing companies viz. IOC, HPCL and BPCL would be able to offset some of their marketing loss by gaining from high gross refining margin (GRM). Still the market is apprehensive about the impact of high crude price on their performance," analysts said.

The concern on IBP is even greater with the company has no cushion from refining margin. In fact, it reported loss of about Rs 8.65 crore in the first quarter of this year.

IBP had sought special grant given its unique status from the government but the latter is yet to respond to IBP's plea.

As per the pricing formula introduced two month ago, OMCs were allowed to alter prices of petrol and diesel, if they go beyond a band.

But that flexibility was withdrawn a month ago. OMCs asked for hike of a Re 1 per liter about 10 days ago but it was turned down.

All companies put together has lost about Rs 2,000 crore this fiscal due to under recovery.