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The lower-than-expected subsidy burden on upstream companies led to a spurt in ONGC and GAIL during the week, while the share prices of oil marketing companies (OMCs), including Indian Oil Corporation, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), saw a slide as investors factored in the under-realisation that these companies will continue to have despite the fuel price hike.
The shares of OMCs are down because despite the increase in fuel prices, these companies will still be making losses and the price hike will not boost their earnings significantly. Even after the hike in retail prices of auto-fuel and LPG, the OMCs will be short by about Rs 20,000 crore this year compared to Rs 16,000 crore in FY08," said a Delhi-based analyst.
The shares of OMCs are down because despite the increase in fuel prices, these companies will still be making losses and the price hike will not boost their earnings significantly. Even after the hike in retail prices of auto-fuel and LPG, the OMCs will be short by about Rs 20,000 crore this year compared to Rs 16,000 crore in FY08," said a Delhi-based analyst.
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