Shares of state-owned oil marketing companies (OMCs) got battered on Wednesday after media reports suggested that they would be asked to absorb a part of the increase in costs due to the surge in global oil prices.
While HPCL plummeted as much as 7.6% to `337.15, in its biggest single-day fall since November, 2015, BPCL tumbled 7.4% to Rs 417.5, its highest single day loss since August 2015. Shares of IOCL slid 6.4% to close the session at `167.80 on BSE.
The oil prices gained 1.2% to $71.86 per barrel at IST 17:11 hours, its highest level since December 2014. It rose 3.5% on Tuesday and has now recorded gains in each of the last three sessions.
The more than 60% rise in crude oil prices from its recent lows in June has prompted investors to offload stocks of oil marketing companies. The three state-owned retailers have seen a combined market capitalisation loss of `45,090 crore since June.
With Wednesday’s fall, HPCL and BPCL have lost more than 19% of their value since the beginning of 2018, while IOCL is down 13.6% during the same period. The market benchmark Sensex, in contrast, has lost a mere 0.34% in value since the start of the year. Oil marketing companies had `500 crore worth of under-recoveries in the year ended March 31, caused by selling petrol and diesel at lower than market prices, a Bloomberg report said.
OMC stocks have had a dream run in the past four years, with HPCL beating the Sensex returns in every year. Shares of BPCL and IOCL too outperformed the Sensex in three of the four years (barring 2017).
In fact, when the Sensex yielded a negative return of 5.03% in 2015, HPCL rose 52.7%, while BPCL and IOCL rallied 38.3% and 29.3%, respectively.