OMC investors to expect better Q3

COMMODITY TIPS | OMC INVESTORS TO EXPECT BETTER Q3:-

Oil price hikes give OMC investors to expect better Q3:-

ET Intelligence Group: The stocks of state-owned oil marketing companies (OMCs) are likely to end their sideways movement following expectations of good third-quarter results. OMCs have been able to increase fuel prices in higher steps in tandem with rising global crude oil prices during the quarter. This reassures investors that OMCs have sustained pricing power.
The international price of crude oil rose by $6 per barrel in the period considered for a price hike on November 29, which necessitated a steep rise in petrol and diesel prices in India.
Market trackers were closely watching whether OMCs were in a position to implement such a high increase in prices. The fact that such a steep rise was passed on to consumers shows the pricing power of OMCs and their ability to protect marketing margins. After the re cent price increase, marketing margins in December 2016 quarter averaged at `2.1 per li tre on diesel compared with `1.9 per litre in the previous quarter. For petrol, the margin was more or less stable at `1.8 per litre.
Every `1 change in petrol margin expands projected EPS by 6-15% for OMCs, while every 5% growth in petrol volume expands EPS by as much as 2%. In addition, India's fuel consumption growth remained robust at 7% and 12% in the first two months of the December quarter.This augurs well for OMCs. On the refining side, OMCs are likely to benefit from inventory gains due to rising oil prices during the December quarter and $1.8 per barrel improvement in the Singapore gross refining margin (GRM).  ..
Crude oil has surged nearly $8barrel in the December quarter so far. In the June quarter, when crude had inched up $10barrel, Indian OilBSE -0.85 % had reported $6.4barrel of inventory gain, while HPCLBSE -0.43 % and BPCLBSE -0.90 % recorded $2barrel gain each. IOCBSE -0.85 % is likely to be the key beneficiary since it has higher inventory days due to more number of inland refineries compared with other OMCs which have refineries closer to coastal areas.
OMCs trade between 9.3x and 9.5x the FY18E earnings -less than 10% premium to their long-term average multiple. The expansion of valuations hinges on their ability to control prices. Also, the extent of earnings upgrades will depend on who will bear the burden of 0.75% cash discount offered by the government on digital payments at petrol pumps. If you want to more information regarding the Stock cash tips, Stock  tips, Nifty tips, Commodity tips, equity tips call @8109999233 or fill  form http://equityresearchlab.com/Freetrial.php please drop your number  for profit calls...?