Movement
of stocks of state-owned oil marketing companies as well as upstream companies
will depend on their Oct-Dec earnings to be announced next week, but will broadly
be rangebound. While all three refiners are likely to report losses for the
quarter ended
December as the government has so far not announced any compensation for the revenue
loss incurred on subsidised sale of fuels, the realisations of upstream
companies would
remain under pressure because of the subsidy burden. The oil ministry has
sought 237.87
bln rupees as subsidy to part-finance the revenue losses faced by Indian Oil
Corp, Bharat
Petroleum Corp, and Hindustan Petroleum Corp in Oct-Dec. The three public sector-oil
retailers are estimated to have faced revenue losses to the tune of 397.25 bln rupees
during Oct-Dec, of which upstream companies--Oil and Natural Gas Corp and Oil India--will
bear 159.37 bln rupees. Without
the subsidy, BPCL may report a net loss of 14.8 bln rupees in Oct-Dec while HPCL
and Indian Oil may report net loss of 25.52 bln rupees and 42.84 bln rupees, respectively.
However, HPCL Chairman and Managing Director S. Roy Choudhury told Cogencis
this week that the government may announce the subsidy this week. If announced
the companies could report profits. ONGC's bottomline and gross realisation on
crude oil would remain under pressure because of the high subsidy burden. The upstream
major's net profit is seen declining 6% sequentially to 56.8 bln rupees in Oct- Dec.
Also, crude oil prices have softened further with the price of Indian basket
declining to
$104.25 a barrel from $105.50 last week. The crude price trend has been soft
this week with
the Indian basket hitting a low of $103.6 a barrel. The rupee too has recovered against
the US dollar and closed at 62.28 for a dollar this week, 40 paise higher from
a week
ago. Both these factors will provide crucial support to the stocks of oil
companies.
