HPCL, BPCL, IOCL share prices rise 28-38% year-to-date: Should you Buy, Sell or Hold the stocks?

Stock Market Today: Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation Ltd (IOCL) share price have given 28-38% year to date returns to the investors . This is despite challenges on rising crude prices, volatility in gross refining margins, and concerns on marketing margins that erupted ahead of Lok Sabha Elections'2024. Notably while Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation Ltd (IOCL)share price while corrected in March, however have rebounded 9-20% from March Lows.

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Range bound Crude prices positive

Most of the concerns nevertheless are behind. The Brent crude oil prices that had risen past $90 a barrel in April have corrected to around $81 a barrel levels now. Hence the concerns on marketing margins being impacted by higher crude prices are behind. The oil marketing companies as Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation Ltd (IOCL) however have not seen any change in retail price and hence any losses they incurred while crude prices were rising will now be recovered.

Analysts at Motilal Oswal Financial Services who expect oil prices to remain range bound now, say that “We see OMCs as the best way to play a range-bound crude oil price environment with rising downside risks”.

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Strong Balance sheet

The OMCs as Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation Ltd (IOCL) have continued to strengthen their balance sheets and MOFSL analysts estimate a consolidated net debt to equity ratio of 1 times, 0.4 times and 0.6 times for HPCL, BPCL and IOCL in FY26 respectively.

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Q4 Result performance

The OMC as Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation Ltd (IOCL) had reported a mixed bag results performance. IOCL reported a miss on analysts Ebitda estimates, mainly due to lower-than-estimated reported Gross Refining Margins and weak performance of the petrochemical division, said analysts. BPCL’s reported GRM also came below estimates, said analysts, nevertheless its implied marketing margin was above annalists estimates. Overall Ebitda (Earnings before interest, tax, depreciation and amortisation) was below analysts estimate due to weaker than-expected refining performance and an impairment charge in 4QFY24. HPCL Q4 earnings performance nevertheless still was slightly better than estimated aided by higher-than-expected marketing margin. However, refining segment’s performance was below expectations owing to lower-than-estimated GRM for HPCL, said analysts.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions