JPMorgan flags further boost to OMCs in case oil prices cool further; Check out its top picks

Detailed summary

JPMorgan said a further decline in oil prices should drive OMC stocks higher. However, it expects gains to be gradual, given uncertainty around crude price movements and concerns over potential changes in government taxation policies.

Shares of Indian oil marketing companies (OMCs), Hindustan Petroleum Corporation Ltd., (HPCL), Bharat Petroleum Corporation Ltd. (BPCL) and Indian Oil Corporation Ltd. (IOC), have rallied sharply in November as crude oil prices eased, but the stocks remain in the red for the year.

HPCL shares have gained 15% so far in the month of November, while those of Indian Oil and BPCL have risen 12% and 9.5% respectively so far this month.

JPMorgan believes the rally has further room to run, with a sustained correction in crude prices likely to support another leg of gains.

The global investment firm prefers Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) among the three state-run fuel retailers, over Hindustan Petroleum Corporation (HPCL).

JPMorgan said a further decline in oil prices should drive OMC stocks higher. However, it expects gains to be gradual, given uncertainty around crude price movements and concerns over potential changes in government taxation policies.

Crude oil prices have slipped to an 11-week low, falling below $92 per barrel and are trading around $85.61 per barrel, down 1.06% on Thursday, November 12.

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JPMorgan said spot integrated petrol and diesel marketing margins have recovered from the lows seen during the Iran conflict, but remain below pre-conflict levels.

At the same time, consensus estimates for FY27 have seen material cuts amid oil price volatility, while FY28 earnings estimates have remained broadly stable.

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