State-run oil firms to deliver petrol at doorstep, expand diesel service

The state-run oil marketing companies (OMCs) — Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) — are planning to expand doorstep delivery of diesel to 20 more cities, and introduce home delivery of petrol by the next quarter.
The companies plan to have at least 500 doorstep fuel delivery vehicles by the end of this financial year (FY20).

“The response to doorstep delivery of fuel is very good and we are trying to expand this by factoring in both safety and regulation,” HPCL Chairman and Managing Director M K Surana told the media last week.
Though companies currently have clearance only for diesel, the Petroleum and Explosives Safety Organisation (PESO) is expected to give clearance for petrol soon, he added.
According to official data, doorstep delivery of diesel is currently available in 35 cities — with IOC availing the service in 15, BPCL in 13 and HPCL in seven. The fuel delivery scheme mainly targets consumers that buy in bulk. According to the norms, customers ordering more than 2,500 litres should have a PESO licence.
Licences for fuel delivery in four cities by IOC, 10 by BPCL and six by HPCL are expected soon. Based on the data available with OMCs, doorstep delivery of diesel in areas with more industrial activities like Navi Mumbai has touched over 150 kilo litre per month. Other major cities with the facility include Jorhat, Chennai, Bengaluru, Delhi and Udaipur. Fuel is delivered to customers with the help of small vehicles with dispensing machines attached to it.
Based on an International Energy Agency estimate, India’s diesel demand is likely to touch 163 million tonne (mt) by 2030. The consumption of diesel in the country was seen at 83.52 mt in FY19, up 3 per cent from 81.073 mt during FY18. On the other hand, demand of petrol may increase to around 49 mt by 2030. This was 28.28 mt in FY19, up 8 per cent from 26.174 mt during the previous financial year.
Looking at this growth, the OMCs had invited bids to allocate fuel retail outlets across 78,500 locations in the country and had received responses from dealers in 95 per cent of the locations.
Of this, letters of intent have been provided to 9,100 outlets so far. The addition of outlets will more than double the number of fuel pumps in India from 64,976 reported in June. Of this, 27,800 outlets are run by market leader IOC, followed by 15,471 by HPCL and 14,903 by BPCL.

HPCL hits 52-week high; stock surges 20% in two weeks on Q4 nos, oil slip

Shares of Hindustan Petroleum Corporation (HPCL) hit a 52-week high of Rs 330, up 4 per cent, after surging 20 per cent in two weeks on the BSE, lifted by strong earnings in March quarter (Q4FY19) and fall in crude oil prices. In comparison, the S&P BSE Sensex was up 5 per cent during the same period.
The stock surpassed its previous high of Rs 325 touched on June 18, 2018.

The oil prices fell to their lowest in nearly three months after US President Donald Trump said he would impose tariffs on imports from Mexico, stoking fears about global economy.
HPCL had reported 70 per cent year-on-year (YoY) growth in net profit at Rs 2,969 crore in Q4FY19, on account of a better-than-expected performance in the marketing segment. EBITDA (earnings before interest tax depreciation and amortization) increased 55 per cent YoY to Rs 4,660 crore in Q4FY19, supported by an inventory gain of Rs 920 crore.

The state-owned oil marketing company (OMC's) board has recommended final equity dividend of Rs 9.40 per share for the financial year 2018-2019.
“OMCs could not take any price hike to compensate for the rising product prices till mid-May in an election-packed environment. Now onwards, normative margins will be restored allowing HP to be the largest beneficiary as its earnings are highly sensitive to changes in the marketing margins,” analysts at HDFC Securities said in results review with ‘buy’ rating on the stock and target price of Rs 346 per share.
"Concerns around the ability of the OMCs to take price hikes amid elections are overdone and clarity over marketing margins would benefit HPCL the most, according to Motilal Oswal Securities. However, due to high capex (Vizag expansion and Rajasthan refinery-cum-petrochem complex), free cash flow is likely to remain negative in FY20", in our view, the brokerage firm said in result update.
“OMCs were able to get super-normal marketing margins in the last quarter. The intent of the new government and ability to pass on costs during high oil prices will determine the performance of OMCs, going forward. HPCL’s ability to maintain normal marketing margins and trend in refining margins will determine its near term performance,” according to analysts at ICICI Securities in result update.
Besides, HPCL, Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOCL) were up 3 per cent each at Rs 420 and Rs 169, respectively. In comparison, the S&P BSE Sensex was up 0.67 per cent at 40,101 points at 09:52 am.

ONGC deal will benefit in terms of crude procurement, says HPCL CMD

The state-run Hindustan Petroleum Corporation (HPCL) is set to usher in a new era with Oil and Natural Gas Corporation ready to grab a majority stake in the company by January end. On the backdrop of that, HPCL chairman and managing director M K Surana talks to Shine Jacob about the deal and likely MRPL acquisition.
What does this mean to HPCL?
The first thing is that HPCL has a big marketing set up in place. However, we are short of refining capacity. The deal will help HPCL further its refining capacity. ONGC subsidiary Mangalore Refineries and Petrochemicals (MRPL) is into refining but has no substantial marketing presence.
Hence, the deal will be a win-win situation for both the companies. Moreover, the deal will be an advantage in terms of crude procurement and marketing supply for both the companies.
I believe that this will be vital for India’s energy sector in India as having a presence in both upstream and downstream will help us to deal with the volatility in crude oil prices in a better way.
Will your focus on petrochemical sector be getting a boost?
We are now not into petrochemicals. Only recently we have set up a new department for petrochemicals. The deal will be a substantial gain for both the companies in the petrochemical portfolio as further consolidation can happen in this regard.
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What is your take on the pricing of the deal?
Pricing is something that has to be discussed between the buyer and the seller. They must have done their due diligence before the deal. Hence it is not fair from my side to comment on that. From my end, we may not require any approval now and it is upon ONGC to take shareholder approval if required.