OMCs in focus as HSBC hikes target price for IOC, BPCL & HPCL
Citi is of the view that OMCs now offer an attractive investment opportunity. Cheap valuations relative to historicals make it an attractive buy, it said
March 29, 2019 / 10:58 AM IST
Oil & marketing companies (OMCs) were in focus on March 29 after HSBC maintained a buy rating but raised respective target prices on each one of them.
The global investment bank is of the view that concern over marketing margins is short-lived, and even GRMs (gross refining margins) are normalising from lows which are supporting earnings outlook.
HSBC maintained raised its target on Indian Oil Corporation to Rs 199 from Rs 168 earlier. The target price for Bharat Petroleum Corporation was raised to Rs 460 from Rs 429 while Hindustan Petroleum Corporation target price was hiked by HSBC to Rs 341 from Rs 298 earlier.
Citigroup also maintained its buy call on HPCL and raised its target price to Rs 310 from Rs 285 earlier.
The global investment bank is of the view that OMCs now offer an attractive investment opportunity. “Cheap valuations relative to historicals make it an attractive buy. If crude prices stay low, HPCL should be able to deliver on earnings,” it said.
Citigroup also maintained its buy rating on BPCL and raised its target price to Rs 420 from Rs 390 earlier.
BPCL is Citi’s top pick amongst OMCs. The company stands to benefit the most from IMO 2020. Its E&P exposure could provide a hedge against rising crude prices, and Kochi petchem project completion could open up a new revenue stream.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.