Good news for OMCs! Govt mulling to provide Rs 20,000 cr breather; HPCL, BPCL biggest beneficiaries, says Anil Singhvi

In good news for state-run oil marketing companies (OMCs), the government is mulling to provide Rs 20,000 crore breather to them to make up for the losses due to alleviated oil and LPG prices, as per news agency Bloomberg. It was learnt that the talks between the ministry concerned and representatives of OMCs were in final stage.  

Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) will be the biggest beneficiaries if the central government decides to compensate OMCs, said Zee Business Managing Editor Anil Singhvi reacting to the development.  

He said it is big news for OMCs as oil prices have already come down, besides we are also importing cheaper oil from Russia.  

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ऑयल कंपनियों को हुए घाटे की भरपाई की योजना

OMCs को ₹20,000 Cr की भरपाई कर सकती है सरकार pic.twitter.com/2EYoUPUoLO

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Talking about the chart of HPCL, technical expert Sumit Bagadia said HPCL is facing resistance and immediate hurdle at Rs 252. Once the stock clears this level, a level of Rs 260-Rs 270 will be seen.  

On BPCL, expert Simi Bhaumik recommended to buy it for the short-term with stoploss of Rs 338.  

Shares of BPCL ended higher by 1.24% to Rs 342.80 per share, while HPCL stock prices closed with gains of 1.75% at Rs 250.05 a share on the BSE on Monday.  

Earlier, brokerage house Sharekhan maintained a 'Neutral' stance on the sector.  

It said Q1FY23 earnings of cover domestic gas supplies (CGDs) were sharply above our estimates, however, OMCs disappointed given higher-than-expected losses due to large negative auto fuel marketing margin and huge forex loss which more than offset best ever GRMs.  

Upstream PSUs witnessed strong y-o-y earnings growth but missed street high expectations due to high cost and miss on volume/oil realization, said Sharekhan.  

"Increase in APM gas allocation for CNG/D-PNG is a positive development for CGDs and improves volume/margin visibility while likely capping of domestic gas price would remove the overhang of high gas cost for CGDs. Windfall tax has created earnings uncertainty and valuation concerns for upstream PSUs. Softening of crude oil price to help normalize marketing margin for OMCs," it had said.