BPCL shares hit all-time high; OMCs betting big on marketing margin

Indian equities after a record run for seventh session in a row are witnessing profit booking, nonetheless, the one space keeping high losses curbed is the oil and gas sector. At the time of writing the copy, Nifty oil & gas index is up over 2 per cent, with the top performer being BPCL stock.

The stock in today's session has marked its fresh all-time record high. The stock at the day's high hit levels of Rs 370.5, marking an over 7 per cent gain from the previous close.

BPCL also tops as the top performer within the Nifty pack.

OMC benefitting big on marketing margin with fall in crude price

Oil marketing companies amid a fall in crude oil price are betting big on marketing margins which have soared 5 times in just 5 months from 3 per litre as in April to Rs 15 per litre until September 17 as per ICRA Research.
Further, there has been no change in the retail selling price of the fuel since March 2024. The companies within the space seen logging good margin improvement in Q2FY25.

Crude price 

15 March2024        $85.3/bbl
27 September               $70.5/bbl
% fall               -17.3%

Brokerage firm Motilal Oswal in its note on OMC stocks dated September 26 said, "The outlook for marketing margins remains strong amid low crude oil prices and range-bound weak refining GRMs."

We believe concerns about significant retail price cuts for MS/HSD before key state elections are exaggerated. Although OMCs are trading at the higher end of historical ranges, current earnings estimates reflect only INR 3-4/lit in marketing margins, while actual margins exceed INR 10/lit, it added.