UBS has maintained its ‘buy’ rating on Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL), citing healthy integrated margins as crude prices remain in the mid-$70s. The brokerage noted that while high crude premiums and narrow light-heavy spreads may impact profitability, the disruption is expected to be limited.
Key insights:
- LPG under-recoveries continue, impacting profitability for OMCs.
- HPCL is identified as the most leveraged for a potential government grant.
- IOCL – Maintain Buy, target price ₹180
- BPCL – Maintain Buy, target price ₹365
- HPCL – Maintain Buy, target price ₹430
Yesterday’s stock price performance:
- Indian Oil Corporation (IOCL): Closed at ₹116.15, down by ₹2.50 (-2.11%).
- Bharat Petroleum Corporation (BPCL): Closed at ₹244.45, down by ₹4.00 (-1.61%).
- Hindustan Petroleum Corporation (HPCL): Closed at ₹306.10, down by ₹3.75 (-1.21%).
UBS remains positive on the sector’s long-term outlook despite short-term challenges related to LPG under-recoveries and crude premiums.
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