BPCL, HPCL, IOC: OMC stocks tumble 7-9% on oil price surge, UBS downgrade; target prices
Shares of BPCL plummeted 7.49 per cent to hit a low of Rs 326.25. HPCL tanked 8.67 per cent to Rs 370.10. IOC declined 7.29 per cent to Rs 156.30.
- Mar 9, 2026,
- Updated Mar 9, 2026 9:24 AM IST
Shares of oil marketing companies (OMCs) namely Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation Ltd (IOC) tumbled up to 10 per cent in Monday's trade as Brent crude prices surged 29 per cent intraday, raising fears that under-recoveries may rise sharply in the absence of fuel price hikes and weigh on their bottom lines.
Shares of BPCL plummeted 7.49 per cent to hit a low of Rs 326.25. HPCL tanked 8.67 per cent to Rs 370.10. IOC declined 7.29 per cent to Rs 156.30. UBS on Monday said the recent rally in crude prices and refining margins creates a sense of déjà vu, mirroring the 2022 oil market disruption. It downgraded IOC and BPCL to 'Neutral' and HPCL to 'Sell'.
"Integrated (refining + marketing) margins for Indian SOE oil marketing companies (OMCs) are negatively levered to increases in crude prices given limited scope of retail fuel price/ taxation changes, further impacted by FX depreciation (USDINR at 92 vs 79 in CY22). OMCs' higher leverage to marketing also means they lose out if profits shift from marketing to refining," UBS said.
It lowered its target price for IOC to Rs 175 from Rs 190. BPCL's target is reduced to Rs 365 from Rs 425 and HPCL's to Rs 340 from Rs 540.
The foreign brokerage lowered its FY27 and FY28 marketing margin estimates by 43-45 per cent and 22-26 per cent and raise FY27 and FY28 gross refinery margins (GRMs) by 30-48 per cent and 21-39 per cent, respectively.
UBS base case assumes disruptions persist for next couple of weeks without damage to infrastructure. An increase in refining margins translates to an equal decline in marketing margins, and vice versa. All three SOE OMCs are negatively leveraged to this, as they market more diesel than they produce in their refineries. Marketing to retailing ratio (or sales to production ratio) is 2.2 for HPCL, while it is 1.2 for IOCL and BPCL, UBS said.
Shares of oil marketing companies (OMCs) namely Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation Ltd (IOC) tumbled up to 10 per cent in Monday's trade as Brent crude prices surged 29 per cent intraday, raising fears that under-recoveries may rise sharply in the absence of fuel price hikes and weigh on their bottom lines.
Shares of BPCL plummeted 7.49 per cent to hit a low of Rs 326.25. HPCL tanked 8.67 per cent to Rs 370.10. IOC declined 7.29 per cent to Rs 156.30. UBS on Monday said the recent rally in crude prices and refining margins creates a sense of déjà vu, mirroring the 2022 oil market disruption. It downgraded IOC and BPCL to 'Neutral' and HPCL to 'Sell'.
"Integrated (refining + marketing) margins for Indian SOE oil marketing companies (OMCs) are negatively levered to increases in crude prices given limited scope of retail fuel price/ taxation changes, further impacted by FX depreciation (USDINR at 92 vs 79 in CY22). OMCs' higher leverage to marketing also means they lose out if profits shift from marketing to refining," UBS said.
It lowered its target price for IOC to Rs 175 from Rs 190. BPCL's target is reduced to Rs 365 from Rs 425 and HPCL's to Rs 340 from Rs 540.
The foreign brokerage lowered its FY27 and FY28 marketing margin estimates by 43-45 per cent and 22-26 per cent and raise FY27 and FY28 gross refinery margins (GRMs) by 30-48 per cent and 21-39 per cent, respectively.
UBS base case assumes disruptions persist for next couple of weeks without damage to infrastructure. An increase in refining margins translates to an equal decline in marketing margins, and vice versa. All three SOE OMCs are negatively leveraged to this, as they market more diesel than they produce in their refineries. Marketing to retailing ratio (or sales to production ratio) is 2.2 for HPCL, while it is 1.2 for IOCL and BPCL, UBS said.