Buy or Sell? Here's what brokerages say on IOCL, BPCL and HPCL shares
The gains come on the back of a favourable coverage by Japanese brokerage Nomura which remains bullish on the prospects of the state-run refiners. However, Macquarie and Kotak Institutional Equities hold bearish views on them amid likely pressure on margins.
The price cut which has been effective since March 15 triggered a fall of 11% in Hindustan Petroleum Corporation (HPCL), the highest among the three government-owned oil companies. Meanwhile, Indian Oil Corporation and Bharat Petroleum Corporation (BPCL) fell 9% and 8%, respectively, over three sessions.
Since Wednesday, the stocks have been on an upward trajectory. While BPCL has gained 5.3%, IOCL and HPCL have rallied nearly 5%, so far.
Nomura reiterated a buy call on BPCL while upgrading HPCL and IOCL to buy. The Japanese brokerage has also raised the price target in each of the stocks, arguing that the rate cut overhang is behind them and that the refining outlook of OMCs remains healthy.
It expects daily revisions in oil prices to resume after the general elections. The OMCs will also be able to maintain their marketing margins while refining the outlook amid a favourable demand-supply equation and low inventory.
Australian brokerage Macquarie has downgraded OMC stocks even as it raised targets. In its view, moderating refining margins and the risk of retail fuel price cuts warrant a caution on OMCs.
Kotak Institutional Equities also reiterated its 'Sell' stance on the OMC stocks as the brokerage highlighted key concerns over the lack of pricing
