Indian Oil Corp board to consider fundraising through rights issue on July 7; check details

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Also Read: Explained | What does Saudi's oil output cut mean for India? Oil marketing companies had suffered significant losses in the first half of fiscal 2022-23 on high crude oil prices as a result of the Russia-Ukraine war. OMCs did not significantly increase retail prices last year even after crude reached a peak of $140 per barrel in March 2022. Due to this, the oil refiners registered losses as petrol and diesel rates have been unchanged since April 2022.

However, Indian Oil posted a turnaround performance in the last quarter of the financial year when they saw combined profits of nearly ₹20,000 crore. The profits came on the back of lower crude oil prices in 2023 and improved margins. Crude oil prices posted their fourth consecutive quarter of losses amid worries of sluggish global economic activity.

However, the world's top oil exporter Saudi Arabia has now announced further output cuts that will be implemented from August, which could push up crude prices amid a tighter supply in market. Recently, Bharat Petroleum Corporation Ltd (BPCL) also approved a fund raise worth ₹18,000 crore through a rights issue to fund their energy security plans. Brokerage firm Citi in its note mentioned that after BPCL's announcement, it expects Indian Oil to follow suit and announce a rights issue of its own.

OMCs have also seen a sharp surge in share prices over the last few months as their financial health improves. Shares of Indian Oil have risen over 22 per cent each on a year-to-date basis, while those of BPCL are up 12.5 per cent. Shares of state-owned oil refiners - BPCL, IOC, HPCL are trading with gains between 4-6 per cent coming on heavy volumes, starting the week on a strong note.