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Aparna Krishnan

MUMBAI, June 4

OIL and refinery stocks have witnessed a rally during the past month on account of a range of factors from good dividend expectations and upside in profitability.

Analysts are of the opinion that recent quarter performance of most oil and refinery companies have shown remarkable upside in profitability and this upside is sustainable. Says Mr Satyam Agrawal, research analyst, Motilal Oswal Securities, ``The present rally in oil stocks has been due to higher dividend expectation, especially in the case of Indian Oil Corporation (IOC) and also, one expects the good profit figures to be sustained in the ensuing quarters.''

Oil and Natural Gas Corporation's (ONGC) net profits went up by 66 per cent to Rs 10,282 crore for financial year 2002-03. The turnover has risen by 50 per cent to Rs 35,821 crore during fiscal 2002-03 over the previous year's figures. For the same period, BPCL registered a net profit of Rs 1250 crore (Rs 849.8 crore) and Kochi Refineries posted net profits of Rs 456 crore (Rs 68.77 crore).

Oil and refinery companies have declared higher dividends and this trend is expected to continue with IOC as well. ``One expects 35-40 per cent dividend announcement from IOC,'' said a dealer. ONGC declared an interim dividend of Rs 17 while HPCL declared a 20 per cent interim and BPCL declared a final dividend of Rs 13 for the year 2002-03.

The `disinvestment story' has also affected stocks such as HPCL and BPCL during the past month. ``Both the stocks suffered when reports came in that there could be a further delay in the disinvestment process. However, with the disinvestment minister indicating that the process is likely to be taken up soon, the stocks rallied,'' said an analyst from a domestic brokerage firm. Recently, speaking on the occasion of the Maruti initial public offer, Mr Arun Shourie, Minister for Disinvestment, said, ``The success of this issue will set the stage for the primary issues of Nalco, BPCL and other such enterprises, which are on the anvil for disinvestment, partially through this route as well.''

During the past month, HPCL has gained over 10 per cent, BPCL, by 13 per cent and Kochi Refineries has inched up by 24 per cent.

Stocks that hit the 52-week high today are IOC, which closed at Rs 394 registering a new high of Rs 399.80, and ONGC that closed at Rs 496.20 with a new high of Rs 503.90.

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