Stock Market Today: BPCL, HPCL, IOCL shares rebounded on Monday and the share prices of these Oil marketing companies gained up to 2%: With crude oil prices under check analysts expect performance to remain steady
The shares of Hindustan Petroleum Corporation ltd or HPCL, while led the gains for OMC’s on Monday, Bharat Petroleum Corporation or BPCL shares also gained close to 1.7% and Indian Oil Corporation shares with gains of more than 1% during the intraday trades was not far behind the peers,
Here are 3 key factors driving OMC prospects
Key factors influencing the gains and to drive performance
Favorable Crude prices- The Brent crude that had started the month of August at around $68 a barrel levels corrected further during the month of September. The soft Crude oil prices remain supportive for marketing margins of Oil marketing companies as HPCL, BPCL IOCL. The marketing margins are the margins that the oil marketing companies earn by selling auto fuels at the retail outlets.
Refining margins to remain steady; The refining margins though have remained soft with uncertain global economic outlook however still remain steady in Q2 compared to the first quarter.
The Q2FY26 outlook for OMCs so far is steady despite adverse sentiments as per analysts at Emkay Global . They said that Q1 primarily saw some miss in core GRM, along with higher-than-expected inventory losses. However, the refining side currently is sequentially better, with diesel-kerosene cracks strengthening and more than offsetting the decline in petrol.
Another analyst at a domestic brokerage pointed that refining margins are maintaining a rate of $4-5 a barrel during the current quarter which is satisfactory and the peak levels of $5-6 a barrel was never expected in the current uncertain economic environment
Reduced Concerns on LPG under recoveries.
The LPG under recoveries concerns have reduced as on August 8, 2025, the Union Cabinet approved compensation of ₹30,000 crore for OMCs in 12 tranches to address the mounting burden of LPG under-recoveries.
OMCs faced significant under-recoveries in LPG to the extent of ~ ₹220 per cylinder in FY25 (as per CareEdge data), as the higher LPG sourcing cost could not be passed on to the consumers.
With some payout already approved analysts see reduced concerns pertaining to the same.
Looking at the above mentioned facts, its not surprising that analysts maintain positive outlook for OMCs.
Those at ICICI Securities said that “We continue to believe that recovery in GRMs, along with strong marketing margins and lower debt, could drive EPS improvement over FY26–28E, underpinning our strong positive stance on OMCs.” . With moderation in crude, some recovery expected in GRMs and the payout of ₹30,000 crore to compensate for LPG loses, Q2 can look materially stronger, even as EBITDA may see some dip, feel ICICI Securities analysts.
Given lower oil prices and reduced LPG losses, HSBC Securities and Capital Markets (India) Private Limited expect strong earnings growth.
HSBC has increased marketing margin estimates given low crude oil prices leading to higher earnings. They have raised their target prices based on FY27 book values and also roll forward their valuation period to September’25 from June’25, which results in HPCL Target price increasing to ₹520 (from ₹490) and IOCL Target Price increasing to ₹190 from ₹180. They believe that OMCs now have a large margin of safety owing to low oil price and a large capex plan which gives them confidence that a normative level of earnings (assumed) will still be maintained
Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
