Oil & gas stocks were in demand today, 17 January 2013. Indian Oil Corporation (IOC) spurted 6.6% to Rs 315.90. The stock topped the gainers in the BSE's 'A' group. HPCL surged 6.06% to Rs 345.60. The stock was second biggest gainer in 'A' group.
Both the PSU OMCs rose after the government today, 17 January 2013 partially decontrolled diesel prices, giving authority to the marketing companies to change diesel prices by a small margin from time to time as per market conditions. The Cabinet announced that there will be no change in the prices of diesel, kerosene and LPG and that the cap on subsidised LPG cylinders will be raised from six to nine from April 2013.
Upstream oil firm Oil India rose 4.36% to Rs 514.90 on optimism of lower subsidy burden after the government today, 17 January 2013, announced partial decontrol in diesel prices. It was the fifth biggest gainer in 'A' group.
A hike in fuel price augurs well for state-run upstream oil & gas firms as they share part of the under-recoveries of state-run oil refining-cum-marketing firms arising from the government-imposed price caps on three key fuels including diesel, LPG for domestic use and kerosene sold through the public distribution system. India, which imports over 80% of its fuel needs, had liberalised petrol prices in June 2010.
The Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas after trading hours on Wednesday, 16 January 2013, said that the under-recovery on High Speed Diesel (HSD) applicable for 2nd fortnight of January 2013, effective 16 January 2013, has increased to Rs 9.60 a litre from Rs 9.03 a litre for the 1st fortnight of January 2013. In case of Domestic LPG and PDS Kerosene the under-recoveries for January 2013 (effective 1 January 2013) are Rs 490.50 per cylinder and Rs 30.64 per litre, respectively. PSU OMCs are currently (effective 16 January 2013) incurring daily under-recovery of about Rs 384 crore on the sale of Diesel, PDS Kerosene and Domestic LPG.
Essar Oil gained 5.06% to Rs 76.85 and was third biggest gainer in 'A' group. Essar Oil gained for second day in a row after the company reported net profit of Rs 32 crore for Q3 December 2012, as against net loss of Rs 362 crore in Q3 December 2011. The result was announced after trading hours on Tuesday, 15 January 2013. Essar Oil's gross revenue jumped 86% to Rs 25909 crore in Q3 December 2012 over Q3 December 2011. Earnings before interest, taxation, depreciation and amortization (EBITDA) jumped 739% to Rs 1242 crore in Q3 December 2012 over Q3 December 2011. Crude throughput jumped 83% to 5.14 MMT in Q3 December 2012 over Q3 December 2011.
The company said its current price Gross Refining Margin (GRM) surged to $9.75 per barrel in Q3 December 2012 from $2.82 per barrel in Q3 December 2011, reflecting the higher complexity benefits post completion of expansion and optimization projects. Essar Oil said that the refinery is now functioning at over its nameplate capacity of 20 MMTPA with all units stabilized, Essar Oil said in a statement.
Jaiprakash Power Ventures advanced 4.58% to Rs 36.50 and was the fourth biggest gainer in 'A' group. The stock recovered on bargain hunting after 3-day 13.29% slide triggered by the company reporting weak Q3 December 2012 results. On 12 January 2013, Jaiprakash Power Ventures reported net loss of Rs 97.58 crore in Q3 December 2012, compared with net profit of Rs 59.52 crore in Q3 December 2011. Net sales rose 8.6% to Rs 399.17 crore in Q3 December 2012 over Q3 December 2011.