The stocks were the best performers on the Nifty 50 Index.
Shares of the Crude oil marketing companies rose in today’s trade after the crude oil resumed declines after a one-day rally.
The Brent crude oil slip 0.86 percent to trade at 69.52 a barrel.
In the three months to September 2018, OMCs reported a decrease in year-on-year net profit owing to low gross refining margins and foreign exchange losses. While BPCL reported a 48% lower profit in the quarter, HPCL witnessed a 37% and Indian Oil around 12% decline in the net profit.
Axis Capital noted that government intervention and volatile crude oil prices are the two main concerns affecting OMCs. “While oil prices have cooled down recently, we do not see volatility ending here – if crude was to resume its upward journey, threat of government intervention in an election year would resurface,” it said.
Rising crude oil prices and a weakening rupee are seen as risks for OMCs as it leads to an increase in domestic retail fuel prices. Crude oil prices were up 46% year-on-year in the September quarter, whereas the rupee was down 9%.
Despite diesel and petrol prices being deregulated, the government asked OMCs on October 4, 2018 to absorb `1 for each litre of the fuel sold. Axis Capital added that government intervention, if any, will impact marketing margins earned by OMCs, thus crippling a segment that contributed a significant 23-40% of group Ebitda in the deregulated regime.
