As international crude oil prices continue to go northward, petrol, diesel and Liquefied Petroleum Gas (LPG) prices are climbing through the roof making life miserable for the common man. Petrol prices reached a high of Rs 80 per litre when some state governments decided to waive off taxes to reduce prices marginally. Rise in petroleum product prices were blamed for the increase in inflation in recent times.
However, for the Commerce Ministry and Oil Refining and Marketing Companies petroleum products are heroes. They are the top commodities being exported to several countries earning valuable foreign exchange.
In FY 18, petroleum products exports rose 18.73% to US $37.4 bn while the nearest top commodity pearl, pearl, precious and semi-precious stones rose just 4% to US $ 25.9 bn while
Drugs and Pharmaceutical exports came third at US $17.27 bn.
India’s major oil refining companies such as Indian Oil Corporation, Bharat Petroleum, Mangalore Refineries and Petrochemicals Ltd (MRPL) has seen steady growth in exports over the years. India’s largest oil refining company Indian Oil Corporation has achieved export growth from 3.6 mmt in FY16 to 7.3MMT in FY18 while domestic sales rose from 80.7 mmt to 88.8 MMT. MRPL now owned by ONGC Ltd, a Maharatna company exports 75% of its petroleum products.
Reliance Industries Ltd which operates world’s 6th largest refinery at Jamnagar also exports a significant proportion of its petroleum products to world markets.
Oil Companies Bearish Near Term
Despite the better long term financial prospects, Indian oil sector is in a short term bearish phase from May. BSE Oil and Gas Index hit a 52 week high of 16727.41 in November 2017 and thereafter has turned volatile moving in 13200 to 16500 range.
Here are the performance and prospects of listed oil industry majors based on FY18 data: Indian Oil Corp net profit is up 11.71%, annual returns -17.42%, stock trend mildly bullish; Reliance Industries Net profit growth 20.65%, annual return 45.18%, bullish trend, BPCL 3.30% net profit, annual returns -15.21%, mildly bearish trend, MRPL net loss -142.62%, annual return -41.97% and trend bearish. (BSE Annual Return 12.79%)
Leading analysts pointed out that short to medium term prospects based on technical chart readings (RSI, MACD, ADX) are mildly bearish to bearish for most oil players except Reliance.