The Hindu Business Line : Oil PSU stocks flare up

Kolkata, Sept. 10 Hope against despair or a temporary change in the market mood can possibly best explain the price movements in PSU oil stocks especially the standalone refining stocks during the last one week.

All the stocks especially the standalone refiners have gained substantially during the last week.

Crude price surge

According to oil industry sources, there is not much fundamental reason but a relatively better refining margin compared to the corresponding period last year and the talk of possible retail price escalation, which can be attributed for the surge in PSU refining and marketing stocks such as IOC, BPCL and HPCL. The companies are suffering from a crude price surge as well as depreciation of rupee compared to the first quarter and huge marketing losses.

All the three stocks gained by 3.32, 1.35 and 2.40 per cent respectively during the last one week. IOC today closed at Rs 404, marginally lower than the previous day. BPCL and HPCL closed at Rs 315 and Rs 241 respectively, up by 3.65 and 3.39 per cent respectively over Friday’s close.

Standalone refiners

Stocks of standalone refiners such as Bongaigaon Refinery and Petrochemicals Ltd (BRPL), Mangalore Refinery and Petrochemicals (MRPL), Chennai Petroleum Corporation Ltd (CPCL) have reported a sharper movement. On Monday, BRPL registered the highest movement of 6.18 per cent, followed by CPCL (5.27 per cent) and MRPL (4.41 per cent).

The gains were wholesome during the period. BRPL gained 13.4 per cent, MRPL 9.35 per cent and CPCL 8.72 per cent. Incidentally, all the three companies are insulated from the retail price movements as well as crude price volatility and is dependent only on the margins for profit-booking.

Sources say that though the refining margins are on an average currently ruling 40 per cent lower than that the first quarter of this fiscal, it is still higher compared to the second quarter of the last fiscal. (IOC for example is now registering GRMs in the range of $6 a barrel, down from $10 in the first quarter of this fiscal.)

“To us the trend is welcome for only one reason: We always felt that in so far as fundamentals are concerned the price-earning of PSU stocks should be better. Hopefully this trend signifies an improvement in investors sentiment towards this stocks,” says a senior executive of a PSU oil company.

More Stories on : Stock Markets | Stocks | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page