Up to 113% return YTD: Here's what analysts feel about oxygen stocks
Companies like Linde India, National Oxygen and BASF India have delivered 92%, 59% and 25% returns, respectively, to investors on a year-to-date basis until April 20
Oxygen stocks: As India is grappling with the second wave of coronavirus pandemic, the rising demand for medical oxygen has fuelled the scrips of gas-related firms. Market experts believe the momentum is likely to continue until there is a significant drop in the number of Covid-19 cases.
Companies like Linde India, National Oxygen and BASF India have delivered 92%, 59% and 25% returns, respectively, to investors on a year-to-date basis until April 20. On the other hand, Everest Kanto Cylinders, which manufactures steel cylinders for oxygen gas, has gained 113% during the same period.
High demand
According to Crisil Ratings, the demand for medical oxygen is estimated to have rocketed five-fold in the second week of April compared to pre-pandemic levels. A critical Covid-19 patient requires additional oxygen as the virus damages the respiratory system strongly.
The central government last week had also barred industrial use of oxygen except in nine designated sectors to divert the available stocks for life-saving medicinal use. In the past five trading sessions, shares of Bhagwati Oxygen and National Oxygen have advanced 28% and 18%, respectively. Linde India and Everest Kanto have gained 6% and 57%, respectively, since April 12 while BASF has witnessed a rise of 4%.
Expert views
Going with market experts, the momentum is likely to stay in favour of oxygen companies. Kranthi Bathini of WealthMills Securities said, “The rally in oxygen-related stocks may continue. Big players like Linde India and BASF may continue to benefit as there is an acute shortage of oxygen in the country. One should also keep an eye on companies like Everest Kanto Cylinders which deals in oxygen cylinder. However, these stocks do not look cheap after the recent run-up.” Chief Minister Arvind Kejriwal has also urged the Centre to provide medical oxygen to Delhi.
Rahul Sharma of Equity99 believes that Everest Kanto Cylinders can touch Rs 150-160 in the next 6-8 months.
“Investors can buy some stocks of Everest Kanto on dips,” he said.