3 Point Analysis | OMCs report healthy Q4, should you invest ?



oil marketing companies IOC HPCL and BPCL have all reported their earnings for q4 while free I will see strong marketing margins as well as grms were in line with expectations BPCL reported a miss on revenue estimates but the other numbers were largely in line with estimates and while HPCL recorded a 70 percent jump in its net profit the slight miss on the refining was more than offset by beat in the marketing segment let's do a three-point analysis of the earnings of these o MCS as well as where our top brokerage houses placing their bets now 1 how are the earnings of IOC well IOC has reported a 17% here on your rise the fourth quarter profit on foreign exchange gains as well as profits rose to over 6,000 crores now there was a foreign exchange gain of 837 cross in q4 gross refining margins although in line with estimates fell to a little over $4 per barrel from $9 per barrel a year ago now the company also made inventory gain of over 2,600 cross in q4 leading to margin improvement as well now it also retained its market share in most product categories as well as the concerns over geopolitical tensions rising in the Middle East the risk of rising crude oil prices and thereby the chances of subsidy burden on OEM seas continue to loom large right now the increase in debt burden is a key concern as high dividend payouts and large capex will continue to impact cash generation as well now top row creatures believe that the valuations are reasonable but higher debt burden could hinder re-rating from here motya lows wall has a buy rating on ioc with a target price of 198 while yes security says hold with a target price of 142 rupees – how are the q4 earnings of BPCL well BBC L reported a slight miss in q4 revenues but its operating profit shot up to over 4800 crore rupees versus 778 cross sequentially now it also recorded a 16 percent jump in net profit to over 3,100 crore rupees core grm stood at 2.6 dollars per barrel inventory gains and rupee appreciation negated the dip in grm says well now marketing margin inclusive on inventory gain was at an all time high now the marketing margin also stood at 6.3 rupees per litre BPCL scoochie refinery performance has not lift up to the promises with grms consistently below the benchmarks and this could definitely be on the stock going forward now moti Lalo's wall has recommended a buy on BPCL with a target price of for 52 rupees city also has a buy rating with a target price of 420 rupees per share while their security sees a downside from current level says hold with a target of 358 CL si has a sell rating on the stock with the target price of 300 rupees 3 how did HPCL perform in March Kota HPCL reported a better-than-expected performance in q4 with a bid die at 5,200 crore rupees and a profit after tax of 3000 crore rupees now foreign exchange gains of 250 crore rupees also helped the company report better than expected profits now GM's for the quarter were at 4.5 dollars versus 7.1 dollars per barrel in q4 fi 18 now marketing segments performance was definitely ahead of estimates with crude oil prices on a firm trajectory on the back of rising geopolitical tensions in the Middle East and risks of subsidy burden on om C's has been rising HPCL with the most adverse refining to marketing mix is the most leverage to gyrations in the marketing margins as well now on the other hand we expect noble grms to see strength as the new IMO few jury regulations also are implemented now the stock adequately also prices the current volatile environment and trades at a discount to IOC and BPCL moti Lala's wall has a neutral rating on the stock with a target of 309 City has a Buy rating with the target of 310 yes securities has assigned a hold rating with a one-year target price of 275 rupees while CL SC maintains a sell rating on the stock gives a target of 210

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