Buy RIL, ONGC, Oil India; sell HPCL, IGL: What JM Financial says oil & gas stocks

JM Financial has reiterated its 'Buy' rating on Reliance Industries (RIL), Oil India, ONGC, GAIL, and Gujarat Gas, while revising several other oil & gas sector calls, including BPCL, IOCL, HPCL, IGL, MGL, PLNG, and GSPL, under its new rating framework.

The domestic brokerage suggested an unchanged target price of Rs 1,700 for RIL, citing the company’s industry-leading position across businesses and an expected 15–20 per cent EPS CAGR over the next 3–5 years. It highlighted Jio’s ARPU growth (13 per cent CAGR over FY25–28) as a structural uptrend supported by industry dynamics and the need to maintain market balance.

JM Financial also reiterated 'Buy' on Oil India (revised target price to Rs 515) and ONGC (revised target price to Rs 285), noting that the current market price implies a Brent assumption of $60 per barrel against its forecast of $70 a barrel. The brokerage prefers Oil India for its strong earnings compounding potential over the next 2–3 years.

Meanwhile, 'Sell' ratings have been maintained on HPCL and Indraprastha Gas (IGL).

Mahanagar Gas (MGL), Petronet LNG (PLNG), and Gujarat State Petronet (GSPL) have been upgraded to 'Add' from earlier Sell/Hold, as the recent stock corrections have addressed key concerns and reduced downside risks.

Conversely, BPCL and IOCL are downgraded to 'Reduce' from 'Hold', as their recent rallies have limited further upside potential.

For the September quarter, JM expects RIL’s Q2 Ebitda to rise 3.6 per cent QoQ, led by healthy growth in O2C, Retail and Digital businesses but partly offset by decline in E&P business. ONGC and Oil India’s earnings are expected to be largely steady QoQ, while OMCs’ Ebitda are seen falling 16-37 per cent QoQ on sharp moderation in auto fuel GMM, though supported by moderation in LPG UR, robust diesel cracks & lower inventory loss. It suggested a mixed outlook for gas companies.