OMC stocks rally as oil slips below $90 mark, Green trend on row for PSU shares

New Delhi: In Wednesday's trading session, three oil marketing companies (OMCs) - Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), and Indian Oil Corporation Ltd (IOC) - witnessed a surge of up to 5% in their shares. This was due to the drop in Brent crude oil prices, which fell below the psychological level of $90 a barrel.

Data showed Brent crude futures for June delivery last traded at $89.56 per barrel, down 0.90 percent.

"Retail margins run at a loss of Rs 3.30-Rs 4.20 per litre at $90-92 per barrel crude. Our sensitivity analysis shows that crude price must decline to $80-81 per barrel – for retail margins to reverse to a profit of Rs1.3-Rs 1.8 per litre," Nirmal Bang said.

The stocks of HPCL saw a rise of 5.35%, reaching a high of Rs 483.40 on BSE. BPCL shares also saw a climb of 3.87%, reaching a high of Rs 608.25. IOC also witnessed a gain of 3.22% and touched a high of Rs 174.20.

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According to a domestic brokerage, Indian Oil Corporation (IOC) is expected to experience a 10.1% YoY drop in profit, which would amount to Rs 9,042 crore for the March quarter. Meanwhile, Nirmal Bang predicts that Bharat Petroleum Corporation Limited (BPCL) will report a 16.7% YoY decline in standalone adjusted PAT, which would be Rs 6,525 crore.

It's worth noting that BPCL's adjusted PAT for the same quarter last year was Rs 7,840 crore, although this figure excludes a one-time exceptional expense of Rs 1,360 crore that was incurred due to the impairment of investment in BPCL's upstream arm BPRL.

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According to estimations, HPCL will report a YoY growth of 3.2% in PAT at Rs 3,330 crore, bucking the trend among OMCs.The official brokerages are estimating for Q4FY24 Retail pump profit to suffer a hit of Re 0.35 per litre due to the Rs 2 per litre cut from March 2024 in MS/HSD pump prices.

A hit of 14 percent in marketing EBITDA of Rs 260 per tonne is predicted for a long. For BPCL and HPCL, the hit on retail margin in the two weeks of Q4FY24 due to the above pump price cut has cut down by 4-7 per cent from Q4FY24 PAT while in IOCL, this has hit the Q4 FY24 by 5 percent.

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