- The share prices of Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) saw an increase of 3-4% in morning trades on Tuesday.
- The rise was driven by the announcement from BPCL and HPCL that their Board of Directors will be considering a proposal for recommendation of Bonus Equity Share during the next board meeting to consider results and dividend.
- However, by Tuesday afternoon, the BPCL and HPCL share prices had given up most of their gains due to pressure on benchmark indices that declined by 0.8-0.9%.
BPCL and HPCL share prices rise following the announcement of a potential Bonus Equity Share recommendation, but later give up most of their gains due to pressure on benchmark indices.
Board Meeting Announcement Boosts BPCL and HPCL Share Prices
The Board of Directors of BPCL and HPCL is scheduled to meet on 09 May, 2024 to consider and approve Audited Financial results and dividend. This announcement led to a surge in the share prices of both companies in the morning trades on Tuesday. However, the gains were not sustained and by afternoon, the share prices had given up most of their gains due to pressure on benchmark indices that declined by 0.8-0.9%.
Declining Brent Crude Prices Provide Additional Boost
The positive news for the BPCL and HPCL share prices also comes from declining brent crude prices. The Brent Crude, which had crossed $90 a barrel levels in April, has now come closer to $80 a barrel levels. This bodes well for BPCL and HPCL share prices and earnings. Higher crude prices had raised concerns on the marketing margins of HPCL and BPCL. The cooling of Crude prices comes as a positive news for BPCL and HPCL share prices.
Anticipated Jump in Earnings for HPCL and BPCL
For the quarter ending March, HPCL and BPCL are expected to report a sharp jump in Earnings before interest, tax, depreciation and amortisation (Ebitda) sequentially due to rebound in Gross Refining Margins and improvement in auto-fuel Gross Marketing Margins as well as crude inventory gains, as per analysts at JM Financial Institutional Securities. Analysts at Antique Stock Broking also expect BPCL to report 132.4% sequential growth in net profit for the quarter ending March. For HPCL they estimate 820.4% sequential growth on earnings.
Conclusion
The announcement of a potential Bonus Equity Share recommendation by the Board of Directors of BPCL and HPCL led to a temporary rise in their share prices. However, the gains were not sustained due to pressure on benchmark indices. Nevertheless, the declining Brent Crude prices and the anticipated jump in earnings for the quarter ending March provide a positive outlook for the BPCL and HPCL share prices.
