Synopsis: Shares of India’s major oil marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited, have corrected after crude oil prices surged near $120 per barrel. Despite the decline, their stable dividend payout ratios and relatively low valuations could keep them attractive for income-focused investors.
The recent increase in prices of crude oil in the international market, raising the prices to around $120 per barrel, has impacted the stock prices of oil marketing companies in India. Stocks like Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited have faced a downturn in their stock prices in recent trading sessions.
Nevertheless, the consistent dividend payout strategy and relatively low price-to-earnings ratios for the shares of these companies may prove attractive for investors seeking dividend payments after the recent downturn in their stock prices.
Indian Oil Corporation Ltd
Indian Oil Corporation Ltd is a Maharatna company controlled by GOI that has business interests straddling the entire hydrocarbon value chain from refining, pipeline transportation and marketing of petroleum products to R&D, exploration & production and marketing of natural gas and petrochemicals.
With a market cap of Rs 2.26 lakh crore, the shares of Indian Oil Corporation Ltd are trading at Rs 160. The shares are trading at a PE of 6.3, whereas their industry’s PE is at 10, and they have given a return of more than 130% over the last 5 years.
Indian Oil Corporation’s dividend payout ratio is around 30.4%, and its dividend yield is around 4.38%, which shows that it has been maintaining its dividend payout to shareholders. The stock has also declined by 10% due to the increase in crude oil prices to $120 per barrel. However, Indian Oil Corporation’s long dividend payout history and its relatively stable dividend payout ratio make it relevant for investors seeking dividend yield from their investments.
Bharat Petroleum Corporation Ltd
Bharat Petroleum Corporation is a public sector company which is engaged in the business of refining crude oil and marketing petroleum products. With a market cap of Rs 1.4 lakh crore, the shares of Bharat Petroleum Corporation Ltd are trading at Rs 326. The shares are trading at a PE of 5.66, whereas their industry’s PE is at 10, and they have given a return of more than 43% over the last 5 years.
Bharat Petroleum Corporation has a dividend payout ratio of about 32% , and its dividend yield is around 5.37%, which means that the company has a stable dividend payout policy and is paying about one-third of its profits as dividends to its shareholders. The stocks of the company have fallen by about 10% recently due to the sharp rise in the prices of crude oil, which has raised concerns about the profitability of oil marketing companies.
Hindustan Petroleum Corporation Ltd
Hindustan Petroleum Corporation Ltd is mainly engaged in the business of refining crude oil and marketing petroleum products and production of hydrocarbons as well as providing services for the management of E&P blocks.
With a market cap of Rs 82,500 crore, the shares of Hindustan Petroleum Corporation Ltd are trading at Rs 388. The shares are trading at a PE of 5.44, whereas their industry’s PE is at 10, and they have given a return of more than 140% over the last 5 years.
Hindustan Petroleum Corporation has a dividend payout ratio of about 33.2%, and its dividend yield is around 2.71%, which means that the company is paying about one-third of its profits as dividends to its shareholders. The company’s stocks have fallen by about 11.24% recently due to the sharp rise in the prices of crude oil, which has reportedly reached $120 per barrel. However, if the prices of crude oil stabilise and the company’s profits remain stable, the company’s dividend payout ratio is likely to be favourable to its income-seeking investors.
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