HPCL, BPCL, IOC shares get downgrade from Goldman Sachs: Report

Brokerage Goldman Sachs, in its latest note, has reportedly downgraded its recommendations on India's oil marketing companies (OMCs) -- Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) and Indian Oil Corporation Ltd (IOC) -- citing an unfavourable risk-reward outlook.

According to the CNBC TV18 report, HPCL has been downgraded to "Neutral" from "Buy" and its price target has been cut by 35 per cent to Rs 310 from Rs 480 earlier. It added that BPCL has also been downgraded to "Neutral" from "Buy", with its price target reduced by 22 per cent to Rs 340 from Rs 435 earlier.

IOC, meanwhile, has been downgraded to "Sell" from its earlier rating of "Neutral", with the brokerage cutting its price target by 24 per cent to Rs 110 from Rs 145 earlier, the report further stated.

Despite the downgrades, shares of HPCL, BPCL and IOC were trading higher in Tuesday's session as easing oil prices, driven by a temporary de-escalation in geopolitical tensions, supported sentiment. The move was in line with the sharp recovery in domestic benchmark indices.

At last check, HPCL shares were up 3.84 per cent at Rs 331.50, while BPCL rose 2.91 per cent to Rs 279.40. IOC edged up 0.14 per cent to Rs 138.25.

"US President Trump signalled a 5-day halt to attacks on Iran and talked about 'productive' talks with the Iranian leadership. Immediately Iran's foreign ministry denied this. Later they acknowledged that there are attempts to 'get diplomacy going' through the mediation of some countries. Brent crude crashed by 10 per cent to $100 levels on news of positive initiatives to end the hostilities. The market, it appears, is factoring in an end to the war as reflected in the August US oil futures trading at $80," stated VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

Sharing the broader market view, Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, said the outlook remains cautious. "Investors looking to enter should opt for a staggered approach but be prepared for 10-15 per cent kind of stock-wise slide if things go wrong from here," he told Business Today.