Shares of Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL) were trading higher on Tuesday after a leading brokerage upgraded HPCL and IOC to ‘Buy’ while maintaining a positive outlook on BPCL.
The brokerage firm has set a target price of ₹460 per share for HPCL and ₹155 for IOC, while BPCL’s target remains at ₹400 per share. The upgrade is attributed to attractive valuations, a decline in crude oil prices, and expectations of stronger Gross Refining Margins (GRMs).
According to analysts, current valuations are 15-25% lower than the 10-year average Price-to-Book (P/B) ratio. Additionally, crude oil prices are projected to stay below $75 per barrel, benefiting refining margins. A slowdown in global refinery additions in CY25/26 is also expected to support a revival in GRMs.
Furthermore, the expansion in auto fuel marketing margins and a reduction in LPG losses are key factors that could drive profitability for these oil marketing companies (OMCs). The brokerage estimates that the first half of FY26 could contribute more than 70% of the full-year profitability estimates for the sector.
At the time of writing, IOC, HPCL, and BPCL shares were all trading in positive territory, reflecting renewed investor confidence in the sector.
