HPCL Vs BPCL Vs IOCL: Bonus, Dividend; Which Maharatna PSU Oil Stock To Buy If Petrol, Diesel Prices Are Cut?

The crude oil prices have declined sharply by more than 15% in a little over two week, hinting at a possibility for a cut in petrol and diesel prices for Indian oil marketing companies. Currently, largest OMCs in India are HPCL, BPCL and Indian Oil. Also, another key reason for fuel prices cut could be due to upcoming state elections. If that may be the case, which OMC stock to buy?

In its latest report, Emkay Global said, "We believe there are expectations of a retail price cut in auto-fuels for OMCs
(IOCL, BPCL, and HPCL) amid the upcoming state elections. While we do not rule out the same, the model code of conduct for J&K and Haryana is on for a month."

Here are the latest stock performances and rewards by the top 3 OMCs in 2024 so far:

HPCL:

The stock price is at Rs 410.95 apiece, with market cap of Rs 87,442.87 crore on BSE. The stock is near its 52-week high of Rs 457.20 apiece currently. YTD, the stock has gained by 54.2% on BSE so far.

In 2024 so far, HPCL has delivered final dividend of Rs 11 per share, while its interim dividend is of Rs 15 per share for FY24.

Also, the company has distributed bonus issue in the ratio of 1:2, meaning 1 free equity share on existing 2 shares.

Data from BSE showed that HPCL has price-to-equity ratio of 6.59x, and price-to-book ratio of 1.42x. Further, its return on equity (RoE) is of 21.56%.

BPCL:

This leading OMC is at Rs 342.10 apiece, with market cap of Rs 1,48,419.03 crore. BPCL share is also near its 52-week high of Rs 367.20 apiece. YTD, the stock zoomed by 14%.

Meanwhile, in 2024, BPCL rewarded investors with dividend payout of Rs 10.50 per share for which it turned ex-dividend recently in August 2024. Prior to that, BPCL issued bonus shares in a 1:1 ratio, meaning there was 1 free share on the existing 1 free share.

As of September 13, BPCL's price-to-equity ratio is at 7.76x and the price-to-book ratio is at 1.99x. At the same time, the return on equity is about 25.63%.

Indian Oil:

Indian Oil (IOCL) is the largest OMC in market cap. The Maharatna PSU stock is currently at Rs 173.15 apiece with a market valuation of Rs 2,44,509.24 crore. This stock is also near its 52-week high of Rs 196.80 apiece.

Furthermore, IOCL's price-to-equity ratio is at 8.58x, and the price-to-book ratio is at 1.38x. Meanwhile, the return on equity is around 16.13%.

Unlike HPCL and BPCL, Indian Oil has not delivered any bonuses in 2024 but has distributed dividends of Rs 7 per share in 2024 to its shareholders.

HPCL Vs BPCL Vs IOCL: Which OMC Stock To Buy?

In Emkay's view, USD75/bbl Brent in H2FY25, and a Rs4/ltr margin impact from price cuts and excise hikes could still yield Rs5-7/ltr of margins, which is healthy. Based on current Aramco contract prices, system-level LPG under-recoveries could amount to ~Rs300bn by FY25-end, though being a controlled item, a one-time subsidy from GoI is also expected. While Aramco propane-butane for September is steady, futures leading up to Mar-25 are indicating a steady decline given the lower oil prices offsetting seasonality.

On which stocks to buy or sell, Emkay's note said, "We reiterate our BUY rating on HPCL, BPCL, and IOCL. While BPCL is fundamentally the strongest, HPCL's Vizag expansion and modernization project is expected to be fully completed this month, and from Q3FY25 GRM uptick can be seen if stabilization is completed. IOCL stock has relatively underperformed HPCL and BPCL recently, but it does have a higher inventory loss risk."