Goldman Sachs has turned incrementally bullish on India’s state-run oil marketing companies (OMCs), raising target prices across the board as global macro uncertainty boosts refining and marketing margins. The brokerage sees OMCs benefiting from favorable product spreads, controlled retail pricing, and improving domestic demand.
Goldman upgraded its target price on:
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HPCL to ₹475 from ₹425 (Buy)
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BPCL to ₹410 from ₹370 (Buy)
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IOC to ₹125 from ₹110 (Neutral)
The brokerage stated that HPCL and BPCL remain better placed due to greater marketing leverage and asset turnaround strategies. IOC was kept at ‘Neutral’ due to relatively slower earnings leverage despite the tailwinds.
Goldman Sachs raised its FY26E/27E EBITDA estimates by an average of 26% and 5%, respectively, citing improved refining margins (on gasoline/diesel spreads) and better marketing economics due to lower crude volatility and steady retail prices.
With improved global spreads and a supportive domestic environment, Goldman believes OMCs are in a cyclical sweet spot and could outperform over the next few quarters, provided policy risks remain muted and crude prices stay range-bound.
Disclaimer: This article is based on the brokerage report by Goldman Sachs. It does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
