Citi remains optimistic about Indian oil marketing companies (OMCs), suggesting that current levels present opportunities to buy the dip. The brokerage expects strong Q3/Q4 earnings for the sector, supported by inventory gains and LPG compensation.
While negatives such as weak gross refining margins (GRMs), marketing margins, and the impact of discounted Russian crude are in focus, Citi believes offsets are likely from favorable inventory gains. Additionally, all three major OMC stocks have underperformed by 5-10% in the last month, and underperformed their upstream peer ONGC by 10-15% over the last 2-3 months, creating a potential catch-up opportunity.
Citi has a ‘Buy’ rating on all OMC stocks, including HPCL and IOCL, while maintaining an open watch for further positive catalysts.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
