ICICI Securities Bullish On 3 Large & Midcap PSU Maharatna Stocks, Recommends Buy For Gains Up 68%

ICICI Securities has placed a buy call on 3 leading PSU Stocks from the Oil & gas, and petrochemicals sector. These stocks are Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, and Bharat Petroleum Corporation Limited. Below are the key takeaways from the report:

Brokerage's views on the Oil & gas, and petrochemicals sector

According to the brokerage firm, Blended marketing margin for petrol & diesel (based on RTP averages ending 13th Dec) reached a 10-month high of Rs2.4/ltr (margins assuming 13th Dec prices only at a higher Rs6.4/ltr), with average GRMs for Q3TD sustaining at US$13-16/bbl for the three OMCs. This is a material improvement from H1FY23 performance for OMCs. Our estimates suggest that with weaker international prices, retail margins will comfortably exceed breakeven levels for H2 and will be stronger at Rs2-3/ltr for FY24E as well.

The brokerage said, "We believe current levels of crude prices will see an uptick, driven by the steady re-opening of China and tight supply. However, given the counter forces of economic weakness in Europe and slowing demand in US, prices may remain in a narrow range of US$85-90/bbl. We have revised FY23E EPS sharply down by 39/125% for IOCL/HPCL, respectively, to factor H1FY23 losses and assumptions of limited government support. However, BPCL may still see a marginal upgrade of 8% on higher marketing volume and higher GRM for Bina Refinery (Madhya Pradesh). "

It added, "We have raised FY24E earnings estimates materially by 39/16.5/24.5% and TP to Rs130/420/300 per share for IOCL/BPCL/HPCL, and have accordingly upgraded BPCL and HPCL to BUY from Add and Reduce, respectively. Reiterate BUY on IOCL."

1. Indian Oil Corporation Limited (IOCL)

Indian Oil Corporation Limited or IOCL is a Maharatna company. It is a large-cap gas & Petroleum sector company having a market capitalisation of Rs 1,09,016 crore.

According to the given target price of Rs 130/share to the stock of  IOCL, it could give a return of up to 68% if you buy the stock today at the current market price. The stock is currently trading on NSE at Rs 77.40/share. Its 52 week low is Rs 65.20, and its 52 week high is Rs 90.70, respectively.

The stock in the past 1 week has fallen 0.71%. However, in the past 1 month, it has given 11.48% positive returns and in the past 3 months, it gave 11.72% positive returns, respectively. It has given 6.48% positive returns in the past 1 year. On long-term investment tenors of 3 and 5 years, the stock gave a 9.11% negative return in 3 years and 43.53% negative returns in 5 years, respectively.

2. Bharat Petroleum Corporation Limited (BPCL)

Bharat Petroleum Corporation Limited (BPCL) is the second Large cap Gas & Petroleum sector picked by the brokerage with a buy call. It is also a Maharatna Company under the Ministry of Petroleum & Natural Gas, Govt. Of India. It has a market capitalisation of Rs 73,548.51 crore.

According to the given target price of Rs 420/share, if you invest in the stock today at the current market price, it could give you returns on investments of up to 2%. The stock's current market price on NSE is Rs 337.35/share, trading 1.16% down compared to its previous close. Its 52 week high is Rs 406.90 and its 52 week low is Rs 288.05, respectively.

The stock in the past 1 and 3 months has given positive returns, 11.05% in 1 month and 4.58% in 3 months, respectively. However, in the past 1 week, it fell by 2.44%. Also, it has given 6.19% negative return in the past 1 year, 30.77% in 3 years and 36.53% in 5 years, respectively.

3. Hindustan Petroleum Corporation Limited (HPCL)

Hindustan Petroleum Corporation Limited (HPCL) is also a Maharatna company having a market capitalisation of Rs 34,080.62 crore. It is a mid-cap Gas & Petroleum sector company.

The Brokerage has assigned a buy call to HPCL's stock with a target price of Rs 300/share. Considering the given target price, if you buy the stock at the current market price, you are likely to get a return on investments up to 25%.

The stock is currently trading at Rs 240.80/share on NSE, 1.11% down from its previous close. Its 52 week high is Rs 332.20 and its 52 week low is Rs 200.05, respectively.

In terms of return over the past 5 years, the stock has given similar returns to IOCL and BPCL. It has given 15.14% positive returns in the last 1 month, and in the last 3 months, it has given 3.02% positive returns. Whereas, in the last 1 week, it has given 2.15% negative return, respectively. The stock over the past 1 year has given 13.06% negative returns. In the last 3 years, it gave 8.77% negative returns. In the last 5 years, it gave 44.2% negative returns.