Crude Oil Falls to ‘52-Week Low’; 2 Stocks to Invest in!
The recent banking fiasco has not just sent equity investors into panic mode, but energy markets are also facing the heat. Crude oil prices tanked below US$72 per barrel, with brent oil futures making a low of US$71.4 per barrel on Friday which is the lowest level in the last one year.
With oil prices taking a good hit, it might be the right time to look at oil-dependent stocks for the portfolio that would be benefitted from lower oil prices.
Interglobe Aviation Limited
The airline industry is heavily dependent on oil prices as air turbine fuel (ATF) is a significant contributor to their operating costs. In Q3 FY23, fuel expenses remained at 41% of the total expenses for Interglobe Aviation Ltd (NS:). It has a strong foothold in the low-cost air travel segment, having a market capitalization of INR 71,484 crores. Its network includes 75 domestic destinations and 22 international ones, as of Q3 FY23.
Although the company is in losses, the current TTM loss of INR 2,906.79 crores is lower than FY22 and FY21 losses of INR 6,161.83 crores and INR 5,806.43 crores, respectively. The share price of Interglobe Aviation is now trading 15% lower, at INR 1,847, as compared to the 52-week high of 2,180, which might be enough to lure long-term investors to this stock.
Asian Paints Limited
Asian Paints Ltd. (NS:) is a market leader in the paint industry. Paint manufacturers use oil as one of the raw materials and therefore face a significant impact on manufacturing costs due to the price fluctuation of . The company has a market capitalization of INR 2,74,150 crores and trades at a TTM P/E ratio of 73.64.
Smaller players can also be explored such as Berger Paints India (NS:) or Kansai Nerolac Paints (NS:) which are relatively trading at a cheaper valuation, with a P/E ratio of 64.38 and 53.12, respectively. But for most, sticking to a market leader at the cost of a slightly higher premium might be a better option. The stock is currently down 20%, at INR 2,844, from the all-time high of INR 3,582.9.
Read More: Dividend Shopping List: Stocks to Watch out for, ‘with Levels’!