FIIs hike ONGC holding in Q1

FIIs have cut their shareholding in Reliance Industries and oil marketing companies like HPCL and IOC.

They are increasing their shareholding in oil exploration major ONGC.In contrast, mutual funds had ramped up their stake in oil marketing companies, RIL and ONGC.

FII holding in ONGC was 9.43 per cent at the end of the June 2006 quarter as compared with 8.43 per cent at the March 2006 quarter.

Mutual funds too had hiked their stake to 1.12 per cent at the end of Q1 FY 07 as compared to .69 per cent at the end of Q4 FY06. ONGC's gross realisations (prior to subsidy sharing) was $ 71 per barrel in Q1 FY 07 as compared with $ 51 per barrel a year earlier.

Of course, the company's subsidy burden jumped approximately 80 per cent y-o-y at Rs 5,120 crore in the last quarter.

Nevertheless, higher crude prices helped its net profit rise 23 per cent y-o-y at Rs 4,119 crore in the June 2006 quarter. Going forward, with international crude prices strong, it is once again expected to help the company, say analysts.

Clearly, oil marketing companies have been grappling with the difficulties due to surging under-recoveries for auto fuels and LPG, coupled with non-receipt of oil bonds for FY 07.

As a result, FII holding in HPCL has eased to 23.06 per cent at the end of the June 2006 quarter, as compared with 23.24 per cent at the end of the March 2006 quarter.

In contrast, mutual funds had hiked their stake in this company to 3.04 per cent at the end of Q1 FY 07, as compared to with 2.87 per cent in the March 2006 quarter.

Earlier, HPCL saw its operating loss amount at Rs 516.61 crore in Q1 FY07 as compared with an operating loss of Rs 373.64 crore a year earlier, despite net sales expanding 36.95 per cent y-o-y to Rs 20,674.1 crore.

Meanwhile, in the case of IOC, FII holding had dropped to 1.75 per cent in Q1 FY 07 as compared with 1.94 per cent in Q4 FY 06. Mutual fund stake in this PSU was more or less steady at 0.9 per cent.

Surprisingly, FIIs have trimmed their holding in RIL to 20.6 per cent at the end of the June 2006 quarter as compared to 21.35 per cent at the end of the March 2006 quarter.

Analysts highlight that Reliance Industries has had to grapple with surging under-recoveries in retail sales of auto fuels, coupled with margin pressure in its petrochemical business in the June 2006 quarter,which could have led to this trimming of FII stake.

Its operating margins fell 278 basis points y-o-y to 17.27 per cent in Q1 FY07. In contrast, Mfs have hiked their stake in RIL to 2.41 per cent at the end of Q1 FY 07 as compared to 1.76 per cent at the end of the March 2006 quarter.