Energy: Slowdown taking effect - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Energy: Slowdown taking effect

Aug 28, 2001

In FY01, refining stocks were the hot picks with most counters outperforming the benchmark indices. However, in the new fiscal these stocks have done a volte face, having run out of gas. Key pivotals of the sector; Hindustan Petroleum (HPCL), Indian Oil (IOC) and Reliance Petroleum (RPL) have declined by 14.8%, 18.6% and 13.8% respectively since start of the year. Over the same period the Sensex has dipped by 7%.

Among the key reasons for markets abandoning the sector is the sharp slowdown in the economy in 2001, especially in the core sector. Refining, in fact, is the only core sector component to report positive growth for 1QFY02. Crude throughput over this period increased by 6.4%. This, however, is much lower than the 34.5% growth registered in the same quarter of the previous year.

Utilisation Rates
IOC 90.1%
RPL 111.6%
HPCL 91.9%
BPCL 125.6%
As per the Centre for Monitoring the Indian Economy (CMIE), operating rates of the industry have risen from 87.2% in 1QFY01 to 92.8% in 1QFY02. This is due to the rise in crude throughput. Also, RPL has been a major contributor to the rise in operating rates. Utilisation at the RPL plant increased from 86.2% to 111.6% over the concerned periods. However, as per media reports, the company has raised objections with authorities for not being treated similar to public sector oil companies. RPL believes it is being used as a swing plant for covering up any shortage of products in the country. Prima facie, though, the numbers seem to reflect the contrary.

The slowdown in product off-take and the relatively high crude oil prices has affected sentiment in the sector. April '02 is likely to see deregulation in marketing of vehicular fuels. Also, the oil pool mechanism could be done away with. Consequently, this could once again bring the sector into favour.

Equitymaster requests your view! Post a comment on "Energy: Slowdown taking effect". Click here!


More Views on News

5 Green Energy Stocks to Watch as India Readies for a Revolution (Views On News)

Oct 13, 2021

The excitement around green energy stocks has opened up a huge contrarian opportunity in the traditional energy space.

Top Performing PSU Stocks over the Past One Year (Views On News)

Oct 1, 2021

After a decade of underperformance, PSU stocks have woken up. Here are the best performing PSUs of past twelve months.

Linde India Shares Hits New High. Up 230%+ in One Year (Views On News)

Aug 26, 2021

Linde India shares have surged sharply in the past few trading sessions. What's causing the rally?

ONGC Logs Massive Jump in Net Profit as Crude Oil Prices Double (Views On News)

Aug 16, 2021

Rising crude oil prices compensate ONGC's fall in production.

HPCL Shares Under Pressure After Profit Declines in June Quarter (Views On News)

Aug 5, 2021

Rising crude oil prices and forex woes weigh on HPCL's quarterly numbers.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Nov 26, 2021 (Close)