HPCL, BPCL shares in focus on oil prices, Q4 result expectations: Should you Buy, Sell or Hold the stocks?

Stock Market Today: The Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) share price gained 3-4% in morning trades on Tuesday. The gains were led by the announcements made by BPCL and HPCL that their Board  of Directors will also be considering a proposal for recommendation of Bonus Equity Share during the next board meeting to consider results and dividend. 

The meeting of the Board of Directors of the HPCL  and BPCL is scheduled on 09 May, 2024 to consider and approve Audited Financial results and dividend. 

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The BPCL, HPCL share prices though gave up most of gains by afternoon on Tuesday with pressure on benchmark indices that declined 0.8-0.9%. Nevertheless the positive news for the BPCL, HPCL share price is also coming from declining brent crude prices.

The Brent Crude that had gained and crossed $90 a barrel levels in April, however has now come closer to $80 a barrel levels. This bodes well for BPCL, HPCL share price and earnings. 

Higher crude prices had raised concerns on the marketing margins of HPCL and BPCL . The HPCL and BPCL were not being expected to being able to pass higher crude prices to the consumer through any price hikes on auto fuels looking ongoing general elections in the country said analysts, Hence cooling of Crude prices comes as a positive news for BPCL , HPCL share prices.

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Meanwhile for the quarter ending March, HPCL and BPCL are expected to report a sharp jump in Earnings before interest, tax, depreciation and amortisation (Ebitda) sequentially due to rebound in Gross Refining Margins and improvement  in auto-fuel Gross Marketing Margins as well as crude inventory gains, as per as analysts at JM Financial Institutional Securities. 

Analysts at Antique Stock Broking also expect BPCL to report 132.4% sequential growth in net profit for the quarter ending March. For HPCL they estimate 820.4% sequential growth on earnings.

Analysts at HSBC Securities and Capital Markets (India) Private Limited in their mid April report had said that “they expect the government to  allow OMCs to make reasonable returns as they ultimately drive decarbonisation and renewable government initiatives”. HSBC expects refining margins to increase as incremental demand matches incremental refining capacity which is always prone to delays. The low refining margins as per HSBC could provide opportunities for OMCs as near-term stress for OMCs  continued on account of high oil prices.

Meanwhile, many analysts  expect OMCs being allowed to compensate for any losses on marketing margins during the election period, once elections results are declared. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions