Hong Kong-based brokerage firm CLSA said that the perceived benefit from Russian oil imports is overstated. India sources about 36% of its oil imports from Russia, which itself meets only 5% of global demand.
The brokerage mentioned in its note that crude prices could climb to $90-100 per barrel if India halts Russian purchases. It believes that the issue of Russian crude oil imports has now become a political one, with India reiterating its freedom to choose its trade partners within purview of global trade rules.
HSBC struck a more optimistic tone, pointing out that lower crude prices and reduced LPG losses as tailwinds for OMCs.
The foreign brokerage expects earnings to remain strong and sees any reimbursements for under-recoveries as an added positive. Although Q1 results fell short due to higher inventory losses, marketing margins stayed firm while LPG losses narrowed.
HSBC has maintained its ‘Buy’ ratings on BPCL, with a price target of ₹420, HPCL ₹520, and IOC ₹190.
JPMorgan, however, flagged investor concerns. Despite strong core earnings, stock prices have barely responded, which the brokerage attributes to fears that the government could eventually claw back excess margins.
Weak tax collections and proposals for GST cuts have amplified those worries. Still, JPMorgan argued that the risk-reward remains favourable.
On FY27 estimates, OMC stocks appear inexpensive even after factoring in a ₹3-4 per litre excise duty hike.
JPMorgan added that unless the government intervenes, companies will continue to generate strong cash flows, supporting near-term stock upside. Among OMCs, JPMorgan expressed preference for BPCL.
