Indian Oil Corp., the nation’s second-biggest refiner, and Hindustan Petroleum Corp. rose the most in more than seven months on speculation they may get additional compensation for selling fuels below cost last year.
Indian Oil surged 7.5 percent to 294.75 rupees in Mumbai trading and Hindustan Petroleum climbed 7 percent to 315.40 rupees, both advancing the most since Sept. 7. Bharat Petroleum Corp. rose 5.3 percent to 517.50 rupees, the most since Feb. 1. The benchmark Sensitive Index gained 0.3 percent.
The government has already given refiners, which sell motor and cooking fuels below cost to help curb inflation, 120 billion rupees ($2.7 billion) in cash for the year ended March 31. The oil ministry has sought an additional 196 billion rupees, Jitin Prasada, junior oil minister, said in parliament April 27.
“There are chances that the central government may give the oil marketing companies additional compensation on account of losses from sales of cooking fuels,” said Niraj Mansingka, a Mumbai-based analyst with Edelweiss Capital Ltd. “While our estimates are 50 billion rupees, there are possibilities that the government support may be even higher.”
S.V. Narasimhan, finance director of Indian Oil, and B. Mukherjee, finance director of Hindustan Petroleum, didn’t answer calls to their mobile phones today. S.K. Joshi, finance director of Bharat Petroleum, didn’t immediately comment when reached by telephone.
The state-run refiners may have lost 460.5 billion rupees from the sale of automobile and cooking fuels in the year ended March 31, Prasada said April 27. Oil explorers including Oil & Natural Gas Corp., which also bear part of the subsidy, have given refiners discounts on crude worth 83.6 billion rupees, the minister said.
To contact the reporter on this story: Rakteem Katakey in New Delhi at firstname.lastname@example.org.