State-run OMC stocks remain under pressure after Centre’s move to cut LPG rates

After market hours on Tuesday, the government announced the reduction in the retail prices of cooking gas cylinders in a bid to mitigate the impact of rising inflation on households.

Representative image. Source: Pexels

State-run oil marketing companies’ shares remained under pressure on Thursday, after the Cabinet approved a reduction of Rs 200 per cylinder in the prices of LPG in a big relief for the country’s households. Indian Oil Corporation Ltd (IOCL) shares fell as much as 1.4 per cent in morning deals on Thursday, while the Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) stocks dropped 2.7 per cent and two per cent, respectively, after the three scrips registered losses to the tune of 1-2 per cent the previous day.

After market hours on Tuesday, the government announced the reduction in the retail prices of cooking gas cylinders in a bid to mitigate the impact of rising inflation on households.

According to a report by news agency PTI, bumper earnings in the first five months of the current fiscal year and international crude oil benchmarks coming off their highs will help state-owned oil companies absorb the Rs 200 per cylinder cut in cooking gas rates.

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The three PSU oil marketing companies are likely to continue a trend of bumper earnings following a strong show in the the April-June period, according to the report.

The Saudi CP oil benchmark–or the oil price to which domestic LPG rates are benchmarked– declined from $732 per tonne in March 2023 to $385 in July. Rates have gone up in August to $464 per tonne but still provide enough cushion for oil companies to cut LPG prices, according to the report.