HSBC has maintained its ‘Buy’ rating on the key oil marketing companies (OMCs) — Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), and Indian Oil Corporation (IOC) — citing that the current volatility in global oil prices is beneficial for these firms. The brokerage also noted that the volatility discourages potential government interference in pump prices, which is a positive factor for OMCs.
While auto fuel prices have remained flat over the past two months, largely due to above-normal monsoons, HSBC expects a recovery in the coming period. Despite the weakness in gross refining margins (GRMs), the strong marketing margins of the OMCs are expected to offset this and support overall profitability.
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