The shares of all the three oil marketing companies (OMCs) – Indian Oil Corp, Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) scaled a high today with BPCL touching a life time high as rupee stabilisation and falling under-recoveries renewed investor interest in the downstream business.
On Thursday's session, BPCL closed at Rs 443.15 per share, a jump of 7.25% from the previous close, its all time high. The shares jumped to a high of Rs 458 per share in intra-day trading after opening at Rs 413 on Thursday morning.
Experts say while it is the hopes of rupee stabilising at Rs 61 for a dollar and chances of it coming down to even Rs 58 a dollar in the next few months is what has helped the stocks of OMCs to go up, in case of BPCL some long term investors have also come in perhaps as the recent announcement of a reserve upgrade in Mozambique makes BPCL a better bet among the OMCs.
The rupee on Thursday stood at Rs 61.01 per litre.
“While HPCL has a high beta (the sensitivity of the stock), investors look at BPCL promising exposure to the upstream sector gives it an upper hand among peers,” said Gagan Dixit, analyst with brokerage Quant.
IOC, India's biggest oil marketing company, went up by 3.45% to close at Rs 274.40 per share on Thursday while the third biggest downstream player in India – HPCL jumped up by 3.55% to close at Rs 290.50 per share on Thursday's close.
Besides rupee stabilisation, it is the expectation of falling under-recovery on diesel has also worked in favour of the OMCs.
Dixit said there are expectations by the industry that the under-recovery on diesel will come down to Rs 6.50 per litre by April. This has also helped the companies in seeing a jump in their share prices.
The current under-recovery on diesel stands at Rs 8.37 per litre.