Shares of Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) fell to their 52-week lows on Wednesday as rising crude oil prices continue to hurt oil marketing companies. Indian Oil Corporation, too, continued to slip.
BPCL shares declined to a 52-week low of Rs 308 on BSE in intraday trade but managed to pave their way back into the green territory. The stock settled 0.06 percent higher at Rs 314.70.
Indian Oil stock dropped almost 2 percent during the day and ended at Rs 109.20, down a percent from its previous close. HPCL shares gave up 1.5 percent during the day but finished higher at Rs 215.85, up 0.96 percent from their previous close.
| Stock | Correction in 2022 (YTD) as of June 15 |
| Hindustan Petroleum | 27.33% |
| Bharat Petroleum | 18.82 |
| Indin Oil | 3.45% |
The street remained cautious on OMCs as oil prices rose on Wednesday ahead of an expected big hike in interest rates by the US Federal Reserve. Brent crude futures for August were up 46 cents, or 0.4 percent, at $121.63 a barrel. The dollar too has hit a fresh two-decade high against a basket of currencies as traders braced for an aggressive rate hike.
In its monthly report, the Organization of the PetroleumExporting Countries (OPEC) stuck to its forecast that world oil demand will exceed pre-pandemic levels in 2022.
Antique Broking View has cut EPS estimates between 17-125 percent for oil marketing companies for FY23. It has cut target the price by 36 percent, 13 percent, and 16 percent for HPCL/BPCL/IOCL respectively.
Antique Broking is of the view that rising crude prices continue to drive under-recoveries on petrol, diesel, and LPG. As of Jun 14, annualised under-recovery on fuel products is estimated at a whopping Rs 3.2 trillion, which is too big to be borne by any player/government.
It put the potential losses for the second quarter of the current fiscal at 0.8 trillion, which again is too large to manage.
The brokerage expects the government to cushion loss with another round of excise cuts and retail price hikes.
Harish Madhav, director of finance at Oil India, had last week said the current high crude oil prices are a temporary setback because of the Russia-Ukraine war. Once the issue settles, this type of higher oil prices and cracks are unsustainable, they will moderate significantly, he told CNBC-TV18.
