State-run oil marketing companies (OMCs) shares have witnessed an uptick recently on account of a sharp fall in crude oil prices.

On November 20, shares of OMCs, including Indian Oil Corporation Limited #IOCL Bharat Petroleum Corporation Limited #BPCL and Hindustan Petroleum Corporation Limited #HPCL, surged 14.40 percent, 13 percent, and 22.5 percent, respectively, from Oct 20.

Crude oil prices have dipped in November and are currently trading around $80 per barrel - marking a sharp decline from $90 a barrel seen in last month. Prices cooled from the October levels due to demand worries and as the war in West Asia has not had a significant impact on the oil market.

“…Optimism on OMCs will be contingent on crude sustaining below ~USD 80/bbl with OMCs’ FY24 P/B valuations (at ~0.9x for HPCL/IOCL and 1.1x for BPCL) being only 10% discount to historical average after recent rally. At spot Brent price and actual product cracks, OMCs’ gross auto-fuel marketing margin has jumped to +INR 7.9/ltr (vs. historical margin of +INR 3.5/ltr) and gross auto-fuel integrated margin to +INR 16.8/ltr (vs. historical margin of +INR 11.3/ltr),” said JM Financial in a report.