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Informist, Saturday, Feb. 1, 2025

MUMBAI – In the near term, the outlook towards shares of oil marketing companies is negative, as the government has cut subsidies for liquefied natural gas to INR 121 billion from INR 147 billion in the previous year, an analyst said. For the nine months ended December, the under-recovery of Indian Oil Corp. Ltd. was INR 143.25 billion, Bharat Petroleum Corp. Ltd. was INR 72 billion, and Hindustan Petroleum Corp. Ltd. was INR 76 billion, aggregating to INR 300 billion.

Under-recovery denotes notional losses that oil companies incur due to the difference between the subsidised price at which oil marketing companies sell their products and the price which they should have received for meeting their cost of production. Other than the cut in LNG subsidies, no other major budgetary proposals were announced by the government which should affect the oil sector, the analyst said.

At Davos, US President Donald Trump asked Saudi Arabia and the Organization of the Petroleum Exporting Countries to bring down the price of oil. "The US has the largest amount of oil and gas of any country on Earth... Not only will this reduce the cost of virtually all goods and services, it will make the US a manufacturing superpower," the president has said. Since Trump's ascension as president, global crude oil prices have declined. On Friday, Brent crude futures on the Intercontinental Exchange ended at $76.77 per barrel, significantly lower than last week's closing price of $80.76.

A fall in crude oil prices bodes well for oil marketing companies, whose key raw material is crude oil which is largely imported. However, any further depreciation of the rupee could offset gains made from a fall in crude oil prices.

On the earnings front, Oil India will announce its December quarter results on Friday. The company's net profit is expected to fall 3% on year to INR 15.44 billion, but its revenue is expected to increase marginally on year to INR 53.39 billion.

This week, Oil and Natural Gas Corp. and Indian Oil announced its results for the December quarter. The company's net profit fell 17% on year to INR 82.4 billion, missing the Street's estimate by a wide margin on lower realisations amid softer crude oil prices. However, the company's revenue beat the Street's estimates and declined only 3% on year to INR 337.2 billion. Indian Oil Corp.'s net profit declined 64% on year to INR 28.74 billion, while its revenue declined 2.4% on year to INR 1.94 trillion.

On Saturday, the Nifty Oil & Gas index closed 1.4% lower at 10438.20 points, with 14 of its 15 constituents in the red. All the major stocks in the index except ONGC and Reliance Industries fell during the week. Bharat Petroleum Cand Oil India were the major laggards during the week.

TOP HEADLINES
* Govt raises domestic natural gas prices to $7.94/mBtu for February
* IOC cuts price of 19-kg LPG cylinder by INR 7 to INR 1,797 in Delhi
* IOC ups ATF price by INR 5,078.25/kl to INR 95,533.72/kl in Delhi
* Earnings Review: Falling crude prices hit ONGC's PAT, co misses Street view
* Oil cos invite bids for 1.24 bln ltr ethanol from C-heavy molasses, FCI rice
* Analyst Concall: IOC says LPG under-recoveries spiked debt to INR 1.3 tln
* Earnings Review: IOC Oct-Dec PAT plummets; misses Street view by wide margin
* Earnings Outlook: ONGC may report subdued EBITDA on lower crude realisation
* Analyst Concall:HPCL mgmt sees no disruption in crude oil supply from Russia
* Earnings Outlook: High base to drag down IOC's Oct-Dec PAT, revenue on year

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Akshay V. Johnson
Edited by Avishek Dutta

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