Shares of state-owned oil marketing companies (OMCs) witnessed strong buying on Thursday, with most of the stocks hitting their 52-week highs on fundraising plans. Shares of Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), and Indian Oil Corporation (IOC) touched their respective 52-week highs on the BSE amid surge in volume trades.

HPCL shares rallied 5.6% to hit a fresh 52-week high of ₹307 on the BSE on the back of strong volume trade. As many as 5.17 lakh shares changed hands over the counter compared to the two-week average volume of 1.91 lakh stocks. The counter has risen 53.5% against its 52-week low of ₹200 touched on October 20, 2022.

BPCL shares opened marginally lower at ₹385.05 against the previous closing price of ₹386.25, but soon gained momentum and rose as much as 2.8% to hit a fresh 52-week high of ₹397 on the BSE. On the volume front, 2.2 lakh shares changed hands as against a two-week average of 1.32 lakh stocks.

In a similar trend, IOC shares jumped 3.5% to hit a 52-week high of ₹98.84 after opening higher at 96 against Wednesday’s closing price of ₹95.52. There was a spurt in volume trade as 27.7 lakh stocks changed hands compared to two-week average of 15.48 lakh scrips.

Among others, Oil India shares rose as much as 1.3% to ₹252.30, and GAIL (India) climbed 3.7% to ₹111.35. Oil and Natural Gas Corporation (ONGC) shares surged 1.6% to hit a day’s high of ₹165.30 during the session so far. All these stocks trade near their 52-week highs.

Among private players, shares of Reliance Industries gained as much as 2.3% to ₹2,644.30, with 6 lakh shares changing hands over the counter on the BSE against two-week average volume of 2.14 lakh stocks.

IOC on July 4 informed the exchanges that its board will meet on July 7, 2023 to consider raising of capital through right issue of equity shares to meet the capital expenditure plan for its various projects.

On June 28, BPCL’s board had approved the proposal for raising capital upto an amount not exceeding ₹18,000 crore through rights issue.

ICICI Securities in a latest report said that oil and gas companies are likely to deliver strong year-on-year (YoY) performance in the first quarter of the current fiscal (Q1 FY24). “We expect aggregate operating earnings (EBITDA) to surge 73% YoY to ₹96,800 crore and net income 138% YoY to ₹50,200 crore. However, the trend may not be uniform with very strong YoY performance from OMCs and city gas distribution companies (CGDs) partly offset by muted trends in upstream companies, gas utilities and Reliance Industries (RIL),” it said.

The quarter-on-quarter (QoQ) performance is likely to be far more muted with only a 4% jump in EBITDA and a 6% QoQ decline in net earnings. This would be partly due to a very strong base for RIL, OMCs and the CGDs in Q4FY23 and seasonal variances,” it added.

The agency expects OMCs to see a sharp turnaround in fortunes as moderation in both crude costs and softer product prices are likely to benefit their marketing earnings in Q1. After showing steep losses over H1FY23, marketing margins have steadily recovered over the last 4 months. It estimates petrol and diesel margins at a stellar ₹8-9 per liter in Q1, while GRMs have been pegged at $7.7-9 per barrel (net of windfall tax, estimated inventory loss and Russian crude cost benefit).

The agency expects Reliance Industries (RIL) to see muted earnings in the June quarter due to softer OTC (oil to chemical) margins and relatively slower growth in Jio, the telecom arm of the conglomerate. “RIL is likely to see a sharp decline in its OTC segment earnings, with an estimated US$3.6/bbl QoQ dip in GRMs offset somewhat by a small improvement in integrated petrochemical spreads (helped by softer gas/ethane costs),” the report noted.

“RJio is expected to deliver a 2.5% QoQ rise in EBITDA, while we expect RIL’s retail EBITDA to grow 6.4% QoQ. Overall, we expect RIL’s consolidated EBITDA to decline 3% QoQ and PAT 14% QoQ due to higher depreciation, interest costs and tax driving the higher decline in PAT vs EBITDA for the quarter,” it added.

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