BPCL, HPCL and IOC drop after Moody's report

NEW DELHI: Shares of oil marketing companies BPCL, HPCL and IOC fell in Wednesday's trade after Moody's said the companies' combined cash flow from operations in FY 2018 will prove insufficient for their capital spending and dividend payments, and the shortfall of about Rs 5,000-7,500 crore will be funded by borrowings.

Shares of BPCL settled 2.04 per cent lower at Rs 496.10. HPCL settled 1.93 per cent lower at Rs 451.85, while IOC declined 1 per cent to settle at Rs 413.80 on Wednesday.

Moody’s expects a combined payout by three companies of Rs 20,600 crore in dividends, including distribution taxes, lower than Rs 23,700 crore paid in fiscal 2017 but significantly higher than Rs 8,500 crore paid in FY16.

“These high payments, combined with high capital spending, will keep the companies’ credit metrics weak, particularly retained cash flow (RCF) to debt,” Moody’s said.

Meanwhile, Moody's expects that the three companies' credit metrics will improve for FY18, owing to higher sales volumes, improving margins and lower dividend payments.