Kotak has cut its price target on Indian Oil Corporation by 20% to ₹100 from ₹125 earlier.
The price target for BPCL has also been cut by 20% to ₹240 from ₹300 earlier.
HPCL’s price target has been slashed by Kotak Institutional Equities to ₹235 from ₹335 earlier.
The brokerage has raised its oil price assumption to $85 per barrel for financial year 20278 and $75 a barrel for financial year 2028, adding that the ongoing war in West Asia crisis and disruptions in the Strait of Hormuz, skew the risks of higher oil prices to the upside in the next financial year.
“With no retail pricing freedom, OMCs will have to absorb higher crude, freight, along with insurance costs,” Kotak’s note said. The brokerage also went on to say that the negative public sentiment around LPG shortages makes raising prices of petrol and diesel very difficult for OMCs.
While India’s OMCs have benefitted from elevated marketing margins n the last few years, the upcoming weak earnings are set to erode that buffer created, according to the Kotak note.
The brokerage also anticipates companies to announce new capex for LPG storage once the crisis in West Asia comes to an end.
33-34 analysts cover HPCL, BPCL and IOC. 23 of those have a “buy” rating on HPCL, 24 on BPCL and 20 on IOC. Six analysts have a “sell” rating on HPCL, four on BPCL and five on Indian Oil.
Shares of HPCL, BPCL and IOC fell between 3% to 5% after HSBC downgraded these stocks and also cut their earnings estimates and price targets.
