OMCs share prices jump up to 22% in a month, brokerage bullish on oil stocks amid fuel rates hike

As the fuel prices in the country are on the continuous surge, the oil marketing companies (OMCs) are on the radar of brokerage firm. Similarly, Brent crude extended gains for a fifth consecutive session on Wednesday, as falling stockpiles and a recovery in demand encouraged investors. 

Antique Stock Broking expecting an upside of up to 29 per cent in the OMC shares, it said a sharp increase in petrol retail prices has made ethanol blending very profitable, adding over Rs 0.95 per ltr to petrol's overall margins. The fuel prices have been hiked for the 26th time on Wednesday.  

The brokerage firm believes fuel prices likely to rise further over the next few years driven by the continuous investments by OMCs in marketing and expect margins to rise by Rs 0.2 per ltr every year over the next three years. 

Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL) and Indian Oil Corporation Limited trading volatile in the last five sessions. However, they have jumped between 11 to 23 per cent in the last month, with each of them hitting a 52-week high on June 9, 2021. 

Maintaining a Buy recommendation, the brokerage firm expects BPCL, HPCL and IOCL to grow by Rs 613, Rs 380 and Rs 146 per share with an upside of 27, 29 and 27 per cent respectively.  

Brent crude on Wednesday intraday was up 64 cents, or 0.9 per cent, at $74.63 a barrel, while the US crude gained 0.9 per cent to $72.78 a barrel, after rising 1.7 per cent in the previous session. 

IOCL, BPCL & HPCL hiked petrol price by 24-25 paise and diesel by 13-14 paise Wednesday. Petrol price in Delhi at Rs 96.66 and in Mumbai, it’s Rs 102.82 per litre, while diesel price in Delhi at Rs 87.41 per litre and in Mumbai, it’s 94.84 per litre.  

Similarly, Jet fuel (Aviation Turbine Fuel) price also has been increased by Rs 1,790/ per kL, up 2.8 per cent to Rs 65,908.28/ per kL