HPCL, BPCL, IOC shares fall up to 6%; here's why

Shares of state-owned Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), and Indian Oil Corporation (IOC) fell up to 6% on Monday, in an otherwise positive broader market, as investors weighed their June quarter earnings. These oil marketing companies have reported a combined loss of ₹18,480 crore due to a decline in the margin on petrol, diesel, and domestic LPG in the backdrop of a rise in international crude prices. During the April-June quarter of 2022, IOC, BPCL, and HPCL did not revise fuel prices despite a record surge in Brent crude, the global benchmark for oil prices, to help the government contain inflation, which breached 7%. Adding to the woes, the government in May slashed excise duty on petrol and diesel to provide some respite to consumers instead of being used to square off mounting losses on fuel sales.

Following Q1 earnings report, the share price of HPCL declined as much as 6.2% to hit a low of ₹235.10 in the first two-hour of the day’s trade so far. The stock opened lower at ₹240.25 against the previous closing price of ₹250.70 on the BSE.

Similarly, BPCL shares opened with a loss of 2.2% at ₹328.90, compared to the previous closing price of ₹336.30. During the session so far, the energy heavyweight tumbled 4.76% to touch a low of ₹320.30 on the BSE.

Shares of Indian Oil opened a tad higher at ₹73.3 against Friday’s closing price of ₹73.05 on the BSE. Post opening, the stock slipped 0.9% to hit a low of ₹72.4, with 3.9 lakh shares changing hands over the counter as compared to the two-week average volume of 16.19 lakh scrips.

In comparision, the BSE benchmark Sensex was trading 284 points higher at 58,672 levels, with 18 of 30 shares floating in the green zone. The BSE oil and gas index was down 0.15%, led by HPCL, BPCL, Petronet, and ONGC. Meanwhile, private players Reliance Industries and Adani Total Gas were among notable gainers, rising over 1%.

HPCL on Saturday posted its highest ever quarterly net loss of ₹10,196.94 crore in Q1 FY23, as a freeze on petrol and diesel prices eroded its refining margins. The PSU had reported a net profit of ₹1,795 crore in the same period a year back. As per the company, the basket of crude oil India imports averaged $109 per barrel but the retail pump rates were aligned to about $85-86 a barrel cost. Revenue from the sale of products rose to ₹1.21 lakh crore in the first quarter of the current fiscal year, from ₹77,308.53 crore in the corresponding period last year. The company also incurred a foreign exchange loss of ₹945.40 crore due to fluctuations in the exchange rate.

Similarly, IOC, which is nearly double the size of HPCL, registered a net loss of ₹1,992.53 crore for the June quarter, as against a net profit of ₹5,941.37 crore in the same period a year back. This was the first quarterly loss for the company in over two years after the March quarter of 2020, which was mainly due to inventory losses.

Meanwhile, BPCL also reported a net loss of ₹6,291 crore in the first quarter of the current fiscal, as against ₹3,192.58 crore in the same period last year. Revenue from operations climbed to ₹1.38 lakh crore from ₹89,688.98 crore in April-June 2021.