Shares Of HPCL, BPCL, IOC Trade Lower Today: Petrol, Diesel Price Cut Likely?

Shares of Indian Oil Marketing Companies (OMCs) including Hindustan Petroleum (HPCL), Bharat Petroleum Corporation (BPCL), and Indian Oil Corporation (IOC) traded in the red in the intraday trading On Friday following reports of a likely cut in petrol and diesel prices.

Today, the share price of Hindustan Petroleum Corporation Limited (HPCL) fell 3.90% at Rs 401.50 per share at 12:02 pm IST. BPCL and IOC shares were down 2.80% and 2.48% at 453.00 and Rs 130.00 per share at 12:05 pm IST.

According to media reports, with general elections just a few months away the government is considering slashing prices of petrol and diesel in the near future. The government's decision to slash the rate of diesel and petrol could bring a smile to the common man's face, and also help ease inflation.

According to sources, on Thursday evening the Petroleum Ministry prepared a proposal incorporating the price cuts for petrol and diesel ranging from Rs 10 to Rs 8 per litre. The proposal is reportedly awaiting the Prime Minister's approval.

According to market analysts, if the price of petrol and diesel is lowered, OMCs can likely suffer inventory losses in the third quarter. The average crude oil price in CY23 remained near $82, and the average price of crude oil was around $77 in December. Shares of OMCs have outperformed the benchmark indices in last one year.

OMC share price: Past performance

In the last one year, Shares of HPCL have gained 72.21%, BPCL shares have risen over 38.50% and IOCL shares have soared 73.81% against the Nifty 50's rise of over 19%.

HPCL, IOCL, BPCL: Price Target

Recently, Brokerage firm Emkay Global has increased its price targets for India's state-owned oil refiners - Hindustan Petroleum Corp Ltd (HPCL), Indian Oil Corporation Limited (IOCL), and Bharat Petroleum Corporation Limited (BPCL). Emkay has raised its target Sep'25E EV/EBITDA multiple for BPCL/HPCL/IOCL by 0.4x each to 6.0/6.1/6.2x and raised the TP by 9/11/12% to Rs545/445/135, respectively.

Brokerage firm Emkay Global raises its price targets for India's state-run oil refiners - HPCL Ltd., BPCL Ltd., and Indian Oil Corporation Ltd.

While there is a possibility of retail price cuts before the general elections and oil price volatility may continue, brokerage firm Emkay has maintained its constructive view on OMCs as price cuts could be for a brief period.

Valuations remain reasonable, with current one-year forward price-tobook multiples being 25-50% lower than the 10-year peak multiples; however, post-election optimism wrt revisiting disinvestment, re-deepening of deregulation and other reforms could drive a further rerating, said the brokerage firm.

Emkay has raised its target Sep'25E EV/EBITDA multiple for BPCL/HPCL/IOCL by 0.4x each to 6.0/6.1/6.2x and raised the TP by 9/11/12% to Rs545/445/135, respectively. The brokerage firm has maintained a BUY rating for both, BPCL and HPCL, and an ADD recommendation for IOCL. Near-term stock correction is possible, given the strong & rapid runup, though it would present attractive entry points, said the firm.