The war between Ruia and Ukraine has severely disrupted the global economy. Due to this, the countries importing oil and natural gas are at the receiving end because of their energy import dependency.
India is under stress because of the energy import constraints and western sanctions against Russia. India is deficient in oil and natural gases and is finding it difficult to cope with the rising prices. Let us take a look at how the rising price of oil has impacted HPCL and BPCL.
HPCL
After touching ₹300.95 on 21st April 2022, the shares of HPCL have been on a downward trajectory. Today the stock closed at ₹230.10. This results in a negative return of -16.55% on a yearly basis and -21.19% on a YTD basis.
The company profits for the 4th quarter fell by 40% to ₹1,795 crores on weaker marketing margins. Their sales revenue on the other hand has increased by 24% to ₹ 104,942 crores in the March quarter of 2022.
ICICI Securities have given a target price of ₹ 260 for one year on HPCL
BPCL
BPCL touched the price of ₹397.70 on 21st April 2022. Similar to HPCL the shares of BPCL to have followed a downwards trajectory. Currently, the stock is trading at ₹ 315.95. It is giving negative returns of -33 % on a yearly basis and -18 % on a YTD basis.
The company on Wednesday reported an 82 % decline in the net profits in the March quarter of 2021-22 as compared to the corresponding quarter of 2020-21. Their net profit was ₹ 2130.5 crores for the March quarter of 2022.
The revenue of the company increased to ₹ 1,23,550.93 crores. Even though the company witnessed a growth in revenue the net profit margins suffered due to the increasing cost of crude oil prices.
With exports stagnating, the company is expecting marketing sales volume to decline 10 per cent on a sequential basis and 10 per cent on a year-on-year (YoY) basis. A key factor to consider will be if BPCL will hike its price now due to an excise duty cut.
Reasons For Fall
Despite a 14-year high in the cost of raw materials (crude oil), BPCL, HPCL, and other public sector oil companies kept petrol and diesel prices stable for a record period. These companies began hiking fuel prices on March 22 and stopped after 16 days.
Oil companies continued to lose money despite a Rs 10/litre hike in petrol and diesel prices between March 22 and April 6, as international crude oil prices remained above USD 100 per barrel.
Oil marketing corporations have been unable to raise domestic fuel prices in step with global market increases, putting pressure on their marketing margins.
Disclaimer
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
