Oil prices staged a sharp rebound on Wednesday after some softness earlier in the day after both Israel and Iran launched attacks on energy infrastructure, impacting the world’s biggest gas production facilities in Qatar and Iran.
Brent crude is now trading near the mark of $113 per barrel, while the US crude or West Texas Intermediate, is trading close to the $100 a barrel mark.
Recently, brokerage firm Kotak Institutional Equities raised its oil price assumptions to $85 a barrel for financial year 2027 and to $75 a barrel for financial year 2028.
The brokerage in its note stated that with no retail pricing freedom, OMCs will have to absorb higher crude and freight / insurance costs. It went on to add that while OMCs have benefitted from elevated marketing margins in the last few years, the potential weak earnings are now set to erode the buffer created.
Kotak went on to cut its price target on IOC to ₹100 from ₹125, BPCL to ₹240 from ₹300 and HPCL to ₹235 from ₹335, while maintaining its “sell” recommendation on all three.
Earlier in the week, these companies were also downgraded by HSBC to “hold”, with a sharp cut to price targets.
In a note on January 20, brokerage firm JPMorgan had noted that any $1 per barrel change in average oil prices for financial year 2027 could impact the Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of these OMCs by 7%.
Shares of HPCL are trading 6% lower at ₹328.4. The stock’s 52-week low is at ₹324.1. BPCL shares are trading 3.4% lower at ₹293.5, while those of Indian Oil are down 2.4% at ₹144.75.
(With Inputs From Sonal Bhutra)
