Oil Stocks
Outlook for the week – 11 to 14.08.2014
( www.rupeedesk.in )
Stocks of state-owned oil
marketing companies are likely to track Apr-Jun results next
week but the rupee-dollar
movement and geopolitical developments in Iraq and Ukraine
will continue to have a bearing.
Hindustan Petroleum Corp will
detail its Apr-Jun earnings on Monday followed by
Bharat Petroleum Corp and Indian
Oil Corp on Tuesday. All three companies may report
profits for the quarter as the
finance ministry has approved the subsidy payout.The
finance ministry had agreed to
provide 110 bln rupees subsidy to these companies for
Apr-Jun, which though lower than
131.44 bln rupees sought by the oil ministry, will be
enough to cover up losses.
The three companies together
incurred a total revenue loss of 286.91 bln rupees on sale of
subsidised fuels during
Apr-Jun.The oil ministry has already asked state-owned upstream
oil and gas companies and GAIL
(India) to bear subsidy burden of 155 bln rupees in AprJun.
This will leave the oil marketing
companies to absorb only around 21 bln rupees of
revenue loss in Apr-Jun and hence
report some profits on net basis.
On the other hand, the rupee has
been very turbulent over the last few weeks and may
continue like that in the near
term. Oil companies are huge importers of crude oil and
hence the volatility in the
Indian currency has an impact on their earnings and hence
stocks. A depreciation in the
rupee from current levels may weigh on these stocks.
Meanwhile, tension between Russia
and the West has escalated further with the former
banning import of food products
from Europe and US after the two imposed further sanctions on the country.
