As petrol, diesel prices rise, uncertainty prevails over oil companies; here’s Jefferies’ top stock pick

By: |
Published: April 2, 2018 12:53:18 PM

After the Indian oil marketing companies hiked petrol and diesel prices on the back of rising global crude oil prices, research firm Jefferies said that outlook is uncertain on margins and products' pricing. We take a closer look at its top stock picks.

Jefferies reiterated that IOC shares are its top pick among Indian oil marketing companies.Global firm Jefferies says that the valuations of oil marketing companies have become attractive due to recent fall in the share prices of oil marketing companies. (Image: Reuters)

After the Indian oil marketing companies hiked petrol and diesel prices on the back of rising global crude oil prices, research firm Jefferies said that outlook is uncertain on margins and products’ pricing. Notably, the petrol prices are at a four-year high in Delhi. According to the revised prices, non-branded petrol will cost 10-12 paise more in the major metros Delhi, Kolkata, Mumbai and Chennai at Rs 73.83, Rs 76.54, Rs 81.69 and Rs 76.59 respectively. Global firm Jefferies says that the valuations have become attractive due to recent fall in the share prices of oil marketing companies.

Notably, most of the major oil marketing companies have seen a sharp correction in the quarter gone by. HPCL shares have fallen by more than 16% since January. In the same period, IOC (Indian Oil Corporation) shares have fallen by more than 11%. ONGC ( Oil and Natural Gas Corporation) shares too have seen a sharp decline in the last three month period.

Following the announcement of a hike in prices, IOC shares registered a steep decline trading at Rs 170.65 on BSE this morning. HPCL shares were trading at Rs 340.8 on BSE this morning, lower by nearly 2% while ONGC shares were trading flat at Rs 179 on BSE this afternoon.

According to the Jefferies report, under recoveries may very well be a reality in FY19. However, even though the valuations are attractive following the hall in share prices in the recent months, Jefferies says that it remains selective in the space due to uncertain pricing and margins. The research house reiterated its preference for IOC shares among the major oil marketing companies (OMCs).

Following today’s rate hike petrol prices have peaked to a 4-year high in  Delhi, while Diesel prices have soared to record high levels In Delhi. According to IOC website, petrol retailed at Rs 73.83 per litre, the highest since September- 2013, when rates had hit Rs 76. Further, today’s rate hike has taken diesel prices to life-time high levels at Rs 64.69 a litre in Delhi, Rs 67.38 in Kolkata, Rs 68.89 in Mumbai and Rs 68.24 in Chennai.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition