Oil India & GSPL: Prabhudas Lilladher says 'Accumulate' these two oil PSU stocks

Oil and gas sector's operating profit is expected to improve by 5.9 per cent QoQ to Rs 97,800 crore in the fourth quarter, brokerage Prabhudas Lilladher (PL) said in its recent report today. "Upstream companies like ONGC and OIL India are expected to show marginal improvement in production with net crude realization of $77.5/bbl post windfall tax. Similarly, gas realization will remain unchanged QoQ at $6.5/mmBtu," PL stated.

The brokerage selected Oil India Ltd and Gujarat State Petronet Ltd (GSPL) as its top picks from the sector. "Maintain 'Accumulate' on Oil India with a target price of Rs 708 (earlier Rs 538), based on 9x FY26 EPS," PL said.

"Oil India's net oil realization to come in at $77.5/bbl and gas realization at $6.5/mmBtu. Oil production is expected at 0.87mmt (up 2 per cent QoQ) and gas at 0.84bcm (up 2 per cent QoQ), it mentioned.

For GSPL, PL said traders can 'Accumulate' the stock at current levels for a target price of Rs 399, based on 7x FY26EPS adding the value of investments. "GSPL's volume is estimated at 32.2 mmscmd (up 28 per cent YoY). The marginal decline in operating profit is on account of lower Implied tariff," it stated.

PL underscored that oil marketing companies (OMCs) are expected to report moderate gross refining margins (GRMs) and gross marketing margins (GMMs).

"We thus expect OMCs to report GRMs in the range of $12-14/bbl in Q4. Marketing margins on petrol and diesel have continued to remain strong amid fall in benchmark prices with an average GMM of Rs8.2/4.7/ltr on petrol/diesel," it further said.