RIL shares: Why SoH blockade, Ukraine's strikes on Russia may aid stock; target price
Ukraine’s drone campaigns have resulted in 50 per cent of Russia’s refining capacity getting out of action. Russian refineries produce heavy diesel output like India, which impacts diesel cracks more than gasoline.
- Jul 15, 2026,
- Updated Jul 15, 2026 8:58 AM IST
Nomura on Wednesday said Reliance Industries Ltd could be a key beneficiary of structurally higher refining margins in the near to medium term, thanks to strong cracks as oil products’ supply remains constrained.
The foreign brokerage noted that Ukraine’s drone campaigns have resulted in 50 per cent of Russia’s refining capacity getting out of action. Russian refineries produce heavy diesel output like India, which impacts diesel cracks more than gasoline.
Besides, commercial shipping is back to the pre-ceasefire situation as traffic via the Strait of Hormuz (SoH) has effectively come to a complete halt with only dark transits being reported after Iran announcing the closure and the US reinstating naval blockade,
Hormuz shock hits oil products harder because bypass pipelines of Saudi Arab and the UAE only carry crude, potentially blocking 5-6mbpd of refined products.
"Refining margins may take longer to normalize even if crude oil prices stabilize lower because refinery runs take longer to scale up, and some refineries may require repair from damages incurred. We think Reliance Industries could be a key beneficiary of structurally higher refining margins in the near to medium," Nomura said. It suggested 'Buy' a target of Rs 1,640 on RIL, hinting at 26 per cent potential upside.
The foreign broking firm said oil marketing companies (OMCs) namely BPCL, HPCL and IOC may demonstrate immediate margin impact owing to higher crude oil cost amid stable retail prices. It estimated Rs 77,000 crore Emitda impact on all OMCs combined for every $10 a barrel rise in crude oil prices.
"We estimate that OMCs may be making integrated margins of $11-13 per barre including the benefit of SAED on volumes they procure from independent refiners," Nomura said.
The brokerage has 'Buy' rating on IOC and BPCL; and 'Neutral' recommendation on HPCL. It has targets of Rs 180 for IOC, Rs 440 for HPCL and Rs 365 for BPCL, still implying 12-29 per cent potential upside.
Nomura said city gas distribution companies (CGDs) may be negatively impacted due to the higher cost of imported LNG as 30-40 per cent of their gas mix comes from imported LNG. It suggested 'Buy' on Indraprastha Gas Ltd, Gujarat Gas Ltd and Mahanagar Gas Ltd with targets of Rs 200, Rs 382 and Rs 1,430, respectively.
"Oil prices have reacted sharply with a 10 per cent spike within the last two days, reversing the slide from $100/bbl to $70/bbl post ceasefire announcement. We expect crude oil to price in significant risk premium) and any supply normalisation-led pullback in oil price is contingent on a renegotiated passage to ships. Elevated crude oil price is negative for OMCs’ marketing margins and CGDs’ input costs, while positive for upstream realizations in the near term," Nomura said.
Nomura on Wednesday said Reliance Industries Ltd could be a key beneficiary of structurally higher refining margins in the near to medium term, thanks to strong cracks as oil products’ supply remains constrained.
The foreign brokerage noted that Ukraine’s drone campaigns have resulted in 50 per cent of Russia’s refining capacity getting out of action. Russian refineries produce heavy diesel output like India, which impacts diesel cracks more than gasoline.
Besides, commercial shipping is back to the pre-ceasefire situation as traffic via the Strait of Hormuz (SoH) has effectively come to a complete halt with only dark transits being reported after Iran announcing the closure and the US reinstating naval blockade,
Hormuz shock hits oil products harder because bypass pipelines of Saudi Arab and the UAE only carry crude, potentially blocking 5-6mbpd of refined products.
"Refining margins may take longer to normalize even if crude oil prices stabilize lower because refinery runs take longer to scale up, and some refineries may require repair from damages incurred. We think Reliance Industries could be a key beneficiary of structurally higher refining margins in the near to medium," Nomura said. It suggested 'Buy' a target of Rs 1,640 on RIL, hinting at 26 per cent potential upside.
The foreign broking firm said oil marketing companies (OMCs) namely BPCL, HPCL and IOC may demonstrate immediate margin impact owing to higher crude oil cost amid stable retail prices. It estimated Rs 77,000 crore Emitda impact on all OMCs combined for every $10 a barrel rise in crude oil prices.
"We estimate that OMCs may be making integrated margins of $11-13 per barre including the benefit of SAED on volumes they procure from independent refiners," Nomura said.
The brokerage has 'Buy' rating on IOC and BPCL; and 'Neutral' recommendation on HPCL. It has targets of Rs 180 for IOC, Rs 440 for HPCL and Rs 365 for BPCL, still implying 12-29 per cent potential upside.
Nomura said city gas distribution companies (CGDs) may be negatively impacted due to the higher cost of imported LNG as 30-40 per cent of their gas mix comes from imported LNG. It suggested 'Buy' on Indraprastha Gas Ltd, Gujarat Gas Ltd and Mahanagar Gas Ltd with targets of Rs 200, Rs 382 and Rs 1,430, respectively.
"Oil prices have reacted sharply with a 10 per cent spike within the last two days, reversing the slide from $100/bbl to $70/bbl post ceasefire announcement. We expect crude oil to price in significant risk premium) and any supply normalisation-led pullback in oil price is contingent on a renegotiated passage to ships. Elevated crude oil price is negative for OMCs’ marketing margins and CGDs’ input costs, while positive for upstream realizations in the near term," Nomura said.