Crude Oil prices have fallen dramatically in the international market with Brent Crude dropping from $100 a few months back to the current levels of $66. In India falling crude prices tend to benefit many companies, including those from the automobile sector, oil marketing companies and paint manufacturers. Take a look at 8 companies that will benefit from falling crude prices.
The shares of Asian Paints only recently on Dec 1, 2014 hit a 52-week high of Rs 790 on the National Stock Exchange. Falling Crude Prices tend to benefit these companies since they use crude oil derivatives as a key input. With raw material costs coming down there could be an expansion in margins, which is good for the company and its share price.
Oil marketing companies, which refine crude into petroleum products also benefit due to falling crude prices. The BPCL stock has rallied in the last few weeks and has touched a 52-week high only recently of Rs 785 on falling crude prices. The stock is currently trading at Rs 728 on the NSE.
Like Asian Paints, Berger Paints too will benefit from falling oil prices as they tend to use a crude oil derivative as input. On Dec 1, 2014 the stock hit a 52-week high and analysts say if crude prices stay lower for long we could see more rally in the stock.
Like BPCL, the HPCL stock has also rallied on hopes that falling crude would boost margins. The stock on Nov 27 hit a 52-week high of Rs 627.
Aviation Turbine Fuel forms a significant portion of costs for aviation companies. A drop in crude prices means there would be a fall in aviation turbine fuel. In fact, ATF has been cut only recently and Jet has seen its stock hit a 52-week high of Rs 378 only recently.
Benefit from lower raw material prices
Raw material costs of tyres companies are linked to crude prices. Hence, any drop in crude prices will benefit companies like Apollo.
HUL to Benefit
FMCG major, Hindustan Unilever will also benefit by way of lower packaging costs, as packaging products are a derivative of crude. This will help to boost margins at a time when competition is cut-throat and volumes are low.
Like jet Airways, Spice too would benefit from lower Aviation Turbine Fuel, which forms a significant portion of costs for aviation companies.Expect margins to improve.